First Person: How Much Do I Need in My Emergency Fund?

I find it pretty humorous that most of us spend more time planning a vacation than we do preparing for future challenges such as losing a job or retirement.

Growing up with a Dad that was all about the numbers helped to prepare me for becoming more self-sufficient. I learned the importance of creating an emergency fund early on as my Dad suffered with thyroid cancer in his 40s. Many widows lose their homes in 90 days because there don't have proper life insurance in place and they have no savings. My family was lucky enough that my Dad owned a business that worked even when he couldn't. He taught me that most American families will never be entrepreneurs and will need to plan ahead for financial challenges. A simple way to do that is to save at least 3-6 times your monthly income in a money market account that is accessible and still receives interest.

Most people would be able to find a job in 3-6 months so that is where the number comes in. You don't want to put too much away in a low bearing interest account but you do want at least three months' salary available in case of a major event. You should also have at least $500 extra in the fund for things like car repairs, insurance deductibles, etc. that you don't need to go to your credit card for.

Being self-sufficient is extremely important when there is so much unrest in the economy and world politics. Credit card companies can slash your limits without warning and even close your account. Nothing speaks to your personal stability more than a savings account with enough money to handle your bills, mortgage, and food/clothing/shelter needs.

Take the time to open up a money market account (most banks offer these accounts) and get your first $500 put away so that you have some peace of mind when thinking about your financial future. Taking the first step is huge in changing the way you handle money and think about the power of owning your own stability.

There is nothing more important than being financially stable. More divorces are caused over fights about money than any other reason.

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