Do you keep an emergency fund? If so, how much do you keep in it? I hear the rule of thumb is 3-6 months worth of expenses. Personally, I keep about 3 months in reserves for a rainy day but haven't increased it at all recently. Should I try to grow that fund to cover at least 6 months worth of expenses or should I really go crazy and try for a full year of expenses saved?
If you can do it then I'd suggest working hard or investing enough to guarantee financial security not just for a few months or years but an entire lifetime. Anyway, I think for starters six months of funds for [emergency] expenses would allow you enough time to get back on your feet if a misfortune [say losing a job] struck.
At the moment because money's a little tight, so no I can't afford to put anything aside. But I do believe it's very important to have nest egg to tide you over in emergencies. Someone in finance once told me 10% of your income each month is about the right amount to put aside, but I don't know how practical it is. If I could, I'd want to have saved enough to tide me over at least for a whole year.
Historically, I've kept at least 6-9 months living expenses on a time deposit as an emergency fund. At the moment, finances are tighter so I haven't been able to do that. But once I am back on track I'll aim at maybe 6 months maximum as an emergency fund.
My money is tight these days too, but I like this idea of having money for a whole year. I think that one can never have too much saved for a rainy day.
I don't think that it's crazy to save for a full year, I think that it is actually quite wise. One can never save enough, that's how I feel about things. I have been in situations where even an extra $50. would have been a lifesaver, so I don't begrudge any amount of money saved, no matter how small, as long as it is consistent. It all adds up. In my opinion, the more savings one has, the better.
I think many people are feeling the pinch at the moment, that's why I think putting money aside has temporarily been put on the back burner. I also like the idea of having enough money to last a whole year saved up, but it can only remain a dream for now. As soon as I'm sorted with a good, guaranteed source of income, I'm definitely getting back into it.
I'm definitely one of those feeling the pinch, therefore, my money saving is on the back burner as well, but I need to do better. As a single mother with a teen-age son who is always in need of something, money is an issue, but I try not to make it a concern. I used to save, but stopped. I need to make saving a priority, even if it is a very small amount, just to get back into the habit of it.
I know what you mean, Winnie. We can't dwell on it, or we'd make ourselves sick. All we need to do is to plough on regardless and keep looking for well paying opportunities out there. Stressing out over it will only make you sick and worsen the situation.
I think if you are single.. 3-4 month worth of expenses is good enough as an emergency fund. If you are having a family and you have lots of monthly payables, you have to save for at least 10-12 months worth of emergency fund. Life is tricky you know.. so you better save, manage your debts, manage your risks and invest!
I agree it's important to have a good savings of ready, available cash of at least 3 months. But I think there is a stopping point eventually where is it wise to take some of that save money and invest it so you don't lose too much to inflation. Here is my rule of thumb... 6 months emergency fund of cash in the bank. After that everything I save, half of it will be invested. So if I have $10,000 for my 6 month emergency fund, and then another $5000 saved on top of that, I would take $2,500 and invest in usually in more risky investments, (or safer investments if needed) with the intent to make quick gains. Worse case scenario you lose some of that invested money but it really doesn't impact your life. Best case scenario you make even more money off of that invest money. Too much static money can be bad for your future...
As for me I keep an emergency fund that can last me 6 month's in case of any eventuality. I do that because there was a time I was in between jobs and I stayed jobless for about 5 months. it was quite a frightening ordeal surviving those months. I finally got a job but the lessons learnt were valuable.
IT IS VERY IMPORTANT TO HAVE AN EMERGENCY FUND. AT LEAST 6 MONTHS. Sadly, money is beyond tight for us so we don't have one either. I do have some emergency items. These are items that if need be, we can sell to get those funds. Honestly? I think 6 months is the better plan. If you can go ahead and get a year then go for it.
