Back to Basics – Emergency Fund

Last week, we reviewed rainy day funds; money set aside for smaller financial inconveniences like a car repair or vet bill. A true emergency fund is a cash cushion you set aside to cover larger, longer term expenses like the loss of a job or unexpected illness and medical bills.

After establishing a $500 rainy day fund, we recommended building on that to create your emergency fund. Most experts recommend in the range of three to six months of necessary expenses (in other words things you can’t live without). That’s a great target for most people. If you’re not sure if that’s right for you, or how to get started on your emergency fund you can get the whole story here.