In these tough times it’s vital that you have an emergency fund, but how big should your emergency fund be? The answer to that question depends on your current financial situation.
The basis for your emergency fund should be equal to one months living expenses. Take the time to figure out how much money you really need to meet all of your obligations for a month. If you’re to lose your job, do you really need cable?
Once you have that number figured out, it’s time to find out how many months you may need. The current thought is that you should have 8 months of expenses on hand. I would say 6 is enough, but I’m not as pessimistic as most economists are.
Once you’ve decided on a comfortable month count, take your monthly expenses number and multiply that by the month count. Then you’re done. Now you just have to start saving up that amount.
