Hi! Thanks for writing! Of course the “absolute” answer to this question depends on your personal situation, but I can provide a bit of general information that I hope will be a helpful guide. You may have heard the term “emergency fund.” In financial planning, an emergency fund is money set aside to cover items you haven’t budgeted for. You build the fund in a savings account so that when a financial surprise crops up, you have money to cover it. Many folks live paycheck to paycheck, using all their income each month to cover their bills. When surprises occur, whether they are happy (baby, wedding, travel) or sad (job loss, breakage, illness, arrests), you’ve got money to cover them. If you are able, it is best to put aside some amount of money each month for emergencies until you have about 3 to 6 months of funds equal to your basic expenses. If your job is project-dependent, you’ll want to have a larger emergency fund to cover the periods when you are in between jobs or if an extended weather delay prevents you from working and getting paid. Keep emergency fund money in a saving account in bank or credit union (rather than in your regular checking account where you may be more likely to use it for random or unplanned uses), and be sure to replenish it if you use it as soon as you are able. Have a great day!
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