Personal Finance: How Much do I Need for Emergencies? - as part of the expert series by GeoBeats. It is not easy to save an emergency fund when you are, probably, spending just about everything you make, but it is important to have one, and I will tell you a few reasons why. One, in this economy, there is 9% (Unclear) unemployment right now. Lots of people are out of work, and/or in fear of losing their job. What would you do if you lost your job? If you do not have a cash reserve, which is your emergency fund, you would probably have to tap into either your 401k, take out a loan,which is not good, or use credit cards,probably even worse, and build up debt. So that is probably the key reason to have an emergency fund, the catastrophic thing, losing a job. And so it kind of depends how you feel about your employment. How secure are you? If you are secure, you need less of an emergency fund; if you are not secure, I would say have a year’s worth of living expenses, which means you need to do a budget, figure out how much you spend every month, multiply it by 12, that is your emergency fund. So, If you are more secure, I would say six months maximum emergency fund. Thatis the catastrophic. Then there are the things like you need new tires for your car, the roof starts leaking, a big dental bill comes up that you were not expecting. That also is emergency fund material, because you do not want to put those kind of things on your credit card. So to me that means you need a minimum of $10,000 in an emergency fund, and then a maximum of six months to a year, depending how secure you feel about your work. And that is how I would think about emergency fund money and just start putting it in a way, and put it in a safe investment that yields as much as you can get, like an online bank account.
