How much should you have in your emergency fund? 3 financial experts give their opinion


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These expert tips can help you figure out how much to save.

Key points

  • Having an emergency fund is crucial to avoiding debt and protecting your finances.
  • You will need to decide how much money to put in your emergency fund.
  • Different financial experts have offered varying advice on the matter.

Everyone should consider having an emergency fund in a high-yield savings account where money is accessible. An emergency fund is crucial to avoid financial disaster in the event of a drop in income or unexpected costs. Without a credit card, you may not be able to afford to keep paying bills or cover unexpected expenses without using a credit card or otherwise going into debt.

But how much should be in your emergency fund? It’s a complicated question to answer, but listening to what the experts have to say could help you make an informed choice about what to save for bad weather.

Here’s how much three finance gurus think you should set aside.

That’s how much Suze Orman says you should have saved

Suze Orman is more conservative than many other financial experts when it comes to how much to save for an emergency. She recommends a larger emergency fund that provides more protection.

“Your long-term goal is to have eight months of living expenses set aside in your emergency fund,” Orman said. “I know it’s a lot, but I want you and your loved ones to be well if you’re ever laid off or sick for a long time.”

She acknowledged that it could take a long time to save that much, but recommended working on it over time and starting as soon as possible to try to build up your savings. “The important thing is that you start saving today and so each month you’ll get closer to your goal,” Orman said.

Here’s how much Dave Ramsey says you should have saved

Dave Ramsey’s advice on an emergency fund is a bit more complicated. It actually offered a different savings amount based on your overall financial situation.

“If you have consumer debt, I recommend saving up a $1,000 emergency start-up fund first,” Ramsey said. He made this suggestion so you can focus on paying down debt, but also what to build on so you don’t get trapped in a cycle where you make progress on paying down debt, but then have to borrow again. when something unexpected happens.

But, after paying off everything you owe, Ramsey’s suggestion comes a little closer to Orman’s. “Once you’re debt free, it’s time to increase that amount and save three to six months of expenses in a fully funded emergency fund,” Ramsey recommended.

That’s a wide range, but Ramsey offered some follow-up advice, suggesting that if your job is stable or there are two incomes in your household, you may err on the side of a smaller fund. But for those with less stable incomes, including the self-employed and people who work on commission, a larger fund is needed.

That’s how much Mark Cuban says you should have saved

Finally, billionaire investor Mark Cuban has similar advice to Ramsey, though he errs on the side of a bigger fund.

“If you don’t like your job at some point or you get laid off or you have to move or something goes wrong, you’ll need at least six months of income,” Cuban told Vanity Fair. .

Ultimately, it’s up to you whether you want a three month fund, a six month fund, an eight month fund, something in between, or even a larger amount saved. But at the end of the day, while there is disagreement over how much to save, the important thing is to have something aside to protect your future.

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