{"id":15998,"date":"2023-02-15T07:35:58","date_gmt":"2023-02-15T13:35:58","guid":{"rendered":"https:\/\/www.fitbux.com\/articles\/?p=15998"},"modified":"2023-03-02T17:57:57","modified_gmt":"2023-03-02T23:57:57","slug":"how-much-emergency-fund","status":"publish","type":"post","link":"https:\/\/www.fitbux.com\/articles\/how-much-emergency-fund\/","title":{"rendered":"How Much Emergency Fund You Should Have: 6 Key Factors"},"content":{"rendered":"

Nobody wants to waste money.\u00a0 When you have too much money in an emergency fund or its not in the right place then your money isn\u2019t doing anything for you. Therefore, you are wasting it.<\/p>\n

However, if you have too little in an emergency fund, you may be taking on a lot of financial risk.<\/p>\n

That then begs the question: How much emergency fund should you have?<\/p>\n

Some people respond to this question with a simple answer such as six months.\u00a0 However, a cookie cutter answer maybe easy but its far from a good answer in regards to making your money work for you.<\/p>\n

In this article, I\u2019m going to answer how much emergency fund you should.<\/p>\n

I detail the factors that go into it, how to maximize your emergency fund, and will include examples.<\/p>\n

Emergency Fund Definition<\/h2>\n

Before getting started, we need to know exactly what is an emergency fund.<\/p>\n

In short, its having enough money in the bank (Checking accounts, savings account, money market accounts, CDs, etc\u2026) that you can cover your expenses for a certain period of time.<\/p>\n

Time is most commonly associated with months.<\/p>\n

For example, lets say you are using FitBUX\u2019s financial planning technology<\/a> and your emergency fund expenses add up to $2,000 per month.\u00a0 If you want a three month emergency fund then you would need $6,000 in bank ($2,000 x 3).<\/p>\n

What Expenses Are Included In Your Emergency Fund<\/h3>\n

You also need to know what is included in your emergency fund.<\/p>\n

Any expenses that are required for you to have a roof over your head, heat, food, and water.<\/p>\n

One major mistake people make is they include debt payments in their emergency fund.\u00a0 Debt should not be included with one exception.<\/p>\n

Any expense required to have a roof over your head should be in your emergency fund.\u00a0 Therefore, if you own a home, you should have all expenses associated with owning it in your emergency fund.<\/p>\n

These expenses include your mortgage payment, property taxes, and insurances.<\/p>\n

Why Is An Emergency Fund Important<\/h3>\n

Before diving into how much emergency fund you need, I want to touch on one last item and that is the why, i.e. why is an emergency fund so important?<\/p>\n

There are three primary reasons:<\/p>\n