An emergency fund
In shortSavings for the big unknowns, like losing work. How much, and where to keep it.
An emergency fund is for the big unknowns: losing work, being too sick to work, a large repair. You hope never to spend it.
A common target is 3 to 6 months of essentials. Essentials are what you must pay, not everything you usually spend.
Example: three months of essentials
- Rent
- $1,400
- Food
- $600
- Bills
- $250
- Transport
- $150
- Total a month
- $2,400
Three months is $7,200. Six months is $14,400.
Keep it in a separate savings account at your bank. You want to reach it in a day or two, but not tap it at the shops. Never keep it as cash at home, where it can be lost or stolen.
It often takes a year or more to build. Start with a $1,000 buffer, then keep going.
In Stuffed, make an Emergency fund goal with your target. Payday puts its share in. Set your bank to move the same amount.
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Related
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- The money ladderThe order to do money in: buffer, expensive debt, emergency fund, then grow.1 min
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