How many months of gross salary you keep in your emergency account?
I know it should be between 3-6 months. just curious if people follow this rule, and if so, how many months exactly that you feel reasonable for you
I know it should be between 3-6 months. just curious if people follow this rule, and if so, how many months exactly that you feel reasonable for you
Trivial One
Favorite Answer
The rule of thumb is 3 to 6 months of expenses, not gross earnings. For me, the idea is to have enough ready cash to cover expenses until I could likely find another job that pays enough to cover my expenses. In the kind of work I do, that would be more than three months, maybe even more than six. That said, I probably have only four or so months of expenses squirreled away, when I'd be more comfortable with eight.
The Oracle of Omigod
I don't understand emergency accounts. What could possibly happen where you need emergency money? You totaled your car? You need a big operation? Your house burns down? What exactly is it that you need money for that you can't wait a week to get the money? You might keep $5000 or so laying around, but you could cash out your entire mutual fund in a week if you needed it, so why would you not put all your money except for about $5000 into a mutual fund? The mutual fund will always have value whether it is up or down and you have increased your chances of increasing your net worth if it is in a fund.
Bob
In today's economy it is better to have 6-12 months in an emergency fund, but that varies a bit by the type of job you have and your ability to be mobile and search for jobs in different states
kelby7670
I have 8 months
J. C.
Zero. Just not a good idea. It doesn't mean that you should spend every penny you make, but putting the money into a ROTH account has more benefit that keeping it in a savings account. And going to a financial planner to make sure you are not wasting too much of your money is another good idea.