How much emergency savings should I keep?

Question

Our income is usually steady, but a job interruption or a large unexpected bill could still put pressure on the household. We have investments and available credit, although neither feels like a perfect substitute for cash in an emergency. How should I decide the size of the cash reserve we actually need?

Soradin · Accepted Answer

Many households start with several months of essential expenses, but the right target is personal rather than universal. For the household plan, an emergency fund is money reserved for unexpected expenses and income interruptions. The plan should quantify cash flow, time horizon, taxes, liquidity, and downside risk before money is committed.

How much emergency savings should I keep?

Soradin

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