Etini
Valued Contributor
They say that life is not assured. This means that we can't accurately predict what would happen in the next moment but we must always be prepared. One way of preparing for the worst is by having an emergency fund. An emergency fund is an amount of money kept aside to help you face unexpected financial emergencies. It is something to just start with when life throws you down a curved path. It may be sudden ill health, job loss etc.
While so many people have bought into the idea of having an emergency fund, one question commonly asked when it comes to emergency accounts os always "How much should I have in my emergency account per time?". To paraphrase it, "what should be the base balance in my emergency account?". This means that your emergency account should not fall below this amount at any given time.
Being objective, I always recommend that tye base balance in an emergency account should be a total of six months living expenses. To put it simply, your emergency funds account should not have a balance that is not enough to take care of your normal life for 6 months. This means that if you use $2000 to survive in a month, then your emergency fund account should read $2000 * 6. That is $12,000. If the balance is below that, then you are not keeping an emergency fund. You wouid have to try and build it to that threshold. This is so because we project that the average emergency situation would take an average person 6 months to recover. If it takes less, then the person loses nothing.
So put more into that emergency account till it is up to the amount that can comfortably keep you afloat for 6 months. It is truly worth it.
While so many people have bought into the idea of having an emergency fund, one question commonly asked when it comes to emergency accounts os always "How much should I have in my emergency account per time?". To paraphrase it, "what should be the base balance in my emergency account?". This means that your emergency account should not fall below this amount at any given time.
Being objective, I always recommend that tye base balance in an emergency account should be a total of six months living expenses. To put it simply, your emergency funds account should not have a balance that is not enough to take care of your normal life for 6 months. This means that if you use $2000 to survive in a month, then your emergency fund account should read $2000 * 6. That is $12,000. If the balance is below that, then you are not keeping an emergency fund. You wouid have to try and build it to that threshold. This is so because we project that the average emergency situation would take an average person 6 months to recover. If it takes less, then the person loses nothing.
So put more into that emergency account till it is up to the amount that can comfortably keep you afloat for 6 months. It is truly worth it.
