Size Up Your Short-Term Savings
The ability to absorb a financial shock is a measure of your financial well-being. The average duration for a person to remain unemployed after a job loss is just over 27 weeks (approximately seven months), according to the Bureau of Labor Statistics (BLS). In addition to having emergency funds for car repairs, medical bills or home maintenance, it’s a good idea to have funds in an easily accessible savings account to cover several months of expenses. If you are your family’s primary income provider, you probably will want to save more.
Rate Your Emergency Fund Readiness
To begin, calculate your monthly spending. Use the Spending Detective Worksheet to add your expenses and classify them into needs and wants that you pay for each month.
Now, concentrate only on the needs column in the worksheet and mark the time to complete this sentence:
I have enough emergency reserve funds readily available to cover __________ months of regular expenses.
- 0 to 1 month
- 1 month
- 2 months
- 3 months
- 4 months
- 5 months
- 6 months
- Over 6 months
Learn how to set up emergency funds through SAM’s My Emergency Fund Plan course.