Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

08/31/2006
What about saving for emergencies?
Do you have any suggestions or could you say something about saving for emergencies? How much should you save for what time period? I know that some planners suggest saving three to six months' worth of your income in case you lose your job, for example.
Gail V. Marquet:
expert info »
Having 3-6 months of income saved is the best scenario. However, if you don't have anything saved, begin by setting up a plan to save $1000 for emergencies. Then go on from there.
Barbara Babcock:
expert info »
Starting an emergency fund can seem like an impossible dream, especially if you’re trying to go from zero dollars to several thousand. But it is a worthwhile effort, because every penny you save gives you some security and lessens your need to tap into credit, and build up more debt. Try this: instead of thinking in terms of monthly income—which can be thousands of dollars—set smaller incremental savings goals. Write out a budget so you know what your regular expenses are. Then pick a single expense—say, $400 for food—and make your first goal to save $400. Once you reach that, go on to another item, and then another. Work your way up to your rent/mortgage, which is usually the biggest expense item for most households. When you’re done, you’ll have one month’s expenses saved. Even if it takes you two years to save one month’s expenses, you’ll feel you’re making progress since you’ll be hitting a lot of mini-goals along the way to your big goal.
Claudia James:
expert info »
3-6 months is still the suggested amount.
 

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