How much should I save on an emergency fund?
Vanguard, the large mutual fund company, suggests reserve $ 2,000, or half of the expenses of one month, which is greater, such as an unexpected but common “shocks”, such as a car or householder repair or medical bill. Then, to protect against a possible loss of employment, he suggests that he continues to save to build a buffer of three to six months of life expenses so that he can pay his invoices while looking for another job. (The average unemployment period was just under six months, according to the latest job report).
With approximately $ 2,000 available, people can generally cover unforeseen costs without resorting to credit cards, which carry interest rates of two digits, said Paulo Costa, a senior economist of the avant -garde behavior that is also a certified financial planner. “The initial $ 2,000 are really what makes a big difference,” he said, by helping people prevent them from being financially derail for common expenses, although not anticipated. “Having it when you need it gives people very tranquility.”
Even smaller amounts can help, said Dr. Costa. “Saving something is better than saving anything.”
Some investigations have shown that for low -income families, savings of only $ 250 to $ 750 can significantly reduce the probability of serious financial problems, such as losing a payment of public services or being evicted.
In addition, keep in mind the circumstances of his family, said Spencer Betts, a certified financial planner in Lexington, Massachusetts. If you are married and both you and your spouse make good salaries, maybe saving three months of expenses is sufficient. But if you are in a niche or low demand industry and you can take time to find a new job, you may want to put aside enough money to cover six months of expenses or more. He recommended establishing a number and a time frame. “The more specific the goal is,” he said, “the easier it is to save.”
J. Michael Collins, professor at the University of Wisconsin in Madison and specialist in domestic finance, said the guide of three to six months could be too discouraging for many people. He suggested that people consider these questions: “What keeps you awake at night? Do rent or mortgage? Payment of a car?” Aim to book enough to cover one month or two of those expenses, he said.
