What is important is that you set an amount for yourself and try to achieve that goal. You should save at least 10% of your salary, however, 25% would be something to strive for. You could start with 10% and every paycheck, month, or year up it by 1%. You would not notice the 1% decrease in the take-home pay, however, your savings, over time, would.
Personally, 6 months of expenses is enough while I pay down a private student loan and put some away in a Roth IRA. I do not have dependents and my job is pretty stable, however, I sleep better at night when I have a larger financial cushion.
An interesting way to determine your financial fund would be to align it to the current unemployment rate. Therefore, since the US currently has 9% unemployment, it would be wise to save 9 months of expenses as it would take longer to find a job.
Use these calculators to see other methods of calculating your emergency fund:
You're right; having an emergency fund is something that helps people sleep soundly at night. Not feeling secure about the status of your finances brings about more worries than you deserve, and most of the time they're due to paranoia. That's why it really helps when you sleep with peace of mind and you know that you can take on anything when you wake up the next day.
ReplyDeleteSofia, thank you for your comment. Check out my newest post regarding Suze Orman's Expense Tracker.
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