YOUR EMERGENCY FUND AND YOU
So how much should you contribute to your emergency fund?
As daunting as it might seem, it’s recommended that you save 3-6 months of living expenses in your emergency fund1. In the age of the internet, many financial institutions have calculators available to estimate the amount you should keep. In fact, Nerdwallet has a fantastic resource breaking down your monthly expenses to deliver a 6 month estimate of how much you should save.
If you’re at the beginning of your journey to creating an emergency fund, where should you start? Set monthly goals and stick to them if you can. Cut back on things that could be considered luxuries, and remember that one day you might be thankful your emergency fund exists.
Once you start to build your rainy day fund, it’s critical to remember what an emergency really is. It is not a vacation – as much as I wish it was – it is not a new wardrobe, or even a new television. It truly needs to be allocated to emergencies.