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How Big Should Your Emergency Fund Be? Six Months Is a Guess.
Find your own number based on your job and bills, and keep investing while you build it up.
Written with help from an AI writing tool for research and editing. Every position, number, and opinion is mine.
When I was around 20 years old, I had a bit of money in mutual funds, some old coins I’d bought by mail, and a little bit in the bank. Soon after that I got married, then we had kids shortly thereafter, and I ended up having to cash it all out to pay for stuff that we really needed. That is life.
None of that money had a chance to compound because, unbeknownst to me at the time, it was supposed to be my emergency fund all along. After that, credit cards became my emergency fund for years. I only started building up an emergency fund in cash after we got our credit card balances down to zero.
So I’ve been on both sides of the question this piece answers: how much cash is enough?
“Six months of expenses. That’s the rule.”
You’ve probably heard it from parents, co-workers, and ads from your bank, and it has become something of a rule, but it’s really just a guess. Six months wasn’t chosen because it’s particularly likely to be how long you’ll go without a paycheck if you’re laid off from…
