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4: Make Your Emergency Fund Plan

How Much Is Enough Emergency Savings?

Nest eggs

Aim to build the emergency fund you are comfortable with, but that will be enough to serve as a safety net in a time of crisis.

  • Research shows that households with emergency savings below $500 are more prone to worry, loss of sleep and other ill effects. Set a goal to save at least $500 for emergencies. 
  • Once you have $500 saved, congratulate yourself! Then set a goal to have enough money to cover at least one month of your financial obligations. 
  • Ultimately aim for a fund with enough savings to cover three or more months of expenses. Especially since, on average, it takes someone who has lost their job several months to move into a new position.

glass of water

Dipping Into Savings

If you have to dip into your savings for any reason, be intentional about replacing any amount that is used. Think of the fund as a glass and the money as water. Once you empty it, you need to refill it — you never know when the next emergency may happen.

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