How Much Do I Need in the Emergency fund? - Bro
The purpose of an emergency fund is to have some cash available in case something unexpected happens. Something unexpected could be losing a job, having a car break, or losing your phone. An emergency fund should not be touched for things that are not emergencies. Things that are not emergencies are christmas, routine auto maintenance, or any other bill that can be anticipated. With this in mind we can now think about how much we need for our emergency fund. When measuring the size of an emergency fund instead of thinking in dollars needed, I think about how many months of expenses I need. For example if I need $3,000 a month to keep the lights on and pay the mortgage (if you have one) then 6 months of emergency savings would equal $18,000. The best way to approach the idea of an emergency fund is to honestly think about what emergencies are likely to come up, how hard they will hit you in the wallet, and how likely can you just pay for it out of your day to day cash flow. Losing ...