How Much Money Should You Have in Your Emergency Fund?

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How Much Money Should You Have in Your Emergency Fund?

Important things to know about the minimum balance you should have in your emergency fund

This is probably the most commonly asked question about emergency funds. Just the term ‘emergency fund or contingency fund’ may mean different things to different people.

To some, it may sound like a lot of money and they may feel discouraged from starting one. However, nothing can be further from the truth. An emergency or contingency fund is not such a huge undertaking.

Your emergency fund must have enough balance to cover your living expenses for a specified period of time starting from 3 months to 2 years or less.

You can choose to cover basic living expenses with your emergency fund. Or, all expenses including little luxuries like Netflix subscription, things we take for granted but are obviously absolutely necessary for our survival.

You can start with a goal of covering your living expenses for 3 months and slowly build it to cover expenses for 6 months, 12 months and so on, as per your needs.

Interested in learning more about emergency funds? Check out our other articles on emergency funds where we have covered How to Start an Emergency Fund, 4 Reasons to Start an Emergency Fund and 3 Things to Keep in Mind When Starting an Emergency Fund.

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