![]() ![]() Okay, but how do you know if you should save up three months or six months of expenses? It’s not as complicated as you might think. (This follows the 7 Baby Steps, the proven plan for getting out of debt and building wealth that my fellow Ramsey Personalities and I really break down in Financial Peace University.) This might not seem like a lot, but it’s just a temporary buffer while you pay off that debt.įully funded emergency fund: Once that debt’s gone, you need a fully funded emergency fund of 3–6 months of expenses. Starter emergency fund: If you have consumer debt, you need a starter emergency fund of $1,000. Let’s talk about how much to save for an emergency fund. How Much Should I Save for My Emergency Fund? Your grandmother probably called her emergency fund a rainy day fund, and with good reason! It’s going to rain. But you don’t have to live like that! Cash in the bank brings peace of mind. That’s enough to keep anyone up at night. Ramsey Solutions did a research study that showed 54% of Americans worry daily about their financial situation. I mentioned feeling peace earlier, but I want to bring this home. Having cash in hand means emergencies are paid in full and you can move on. Emergencies are expensive enough without you paying interest on them for months and months. Don’t use a credit card as your emergency fund. When you have an emergency fund, you're prepping for all the unexpected expenses that might come. When you make a budget each month, you’re prepping for all the expected expenses that will come. I can think of so many reasons why you need an emergency fund. This money gives you the power to hand over cash to cover the big and small surprises that come your way. Let’s break down everything emergency fund-from what it is to where to stash it-so you can start living in the peace that savings will bring.Īn emergency fund is money you set aside for life’s unexpected expenses, like car repairs, hospital visits and even job loss. If this kind of financial security sounds like a fairy tale that’s too good to be true, you’ve got to believe me: It. You can rest easy at night knowing you’ll be okay in those life happens moments. When you crack a tooth on a popcorn kernel, feel the AC go out in the middle of summer, or even lose your job-you won’t worry about how to cover the bills. But you can be cash ready with an emergency fund. ![]()
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