In my last post, I talked about my plan for building up my cash positions. While I'm wanting to have a little more cash on hand due to ongoing economic turmoil, I'm not really putting aside money to add to my emergency fund. I've heard a lot of people ask just how much they should keep in cash for emergencies and from my personal study, the consensus seems to be 3 to 6 months worth of living expenses in cash or cash equivalents.
However, I'm the type of investor that likes to see my money earning as much as possible. I do keep some cash on hand in a regular passbook account and an interest bearing checking account, but I don't keep no where near 3 to 6 months worth of expenses. When I lost my job at the first of last year, I only had a little over $1,000 in the bank. That proved to be a sufficient amount to see me through until my unemployment started and I not only managed to get by, but I also continued adding to the investments in both my regular stock account and my IRA on a monthly basis. Everyones' finances are different, so it's really what you would feel comfortable with. I personally think 3 months worth of expenses should be tops for emergency cash, but truthfully it's what makes you feel comfortable. How much do you need in cash on hand so you can get a good nights sleep? That's what you need to ask yourself and then set a goal to put that money aside for a rainy day.
However, I'm the type of investor that likes to see my money earning as much as possible. I do keep some cash on hand in a regular passbook account and an interest bearing checking account, but I don't keep no where near 3 to 6 months worth of expenses. When I lost my job at the first of last year, I only had a little over $1,000 in the bank. That proved to be a sufficient amount to see me through until my unemployment started and I not only managed to get by, but I also continued adding to the investments in both my regular stock account and my IRA on a monthly basis. Everyones' finances are different, so it's really what you would feel comfortable with. I personally think 3 months worth of expenses should be tops for emergency cash, but truthfully it's what makes you feel comfortable. How much do you need in cash on hand so you can get a good nights sleep? That's what you need to ask yourself and then set a goal to put that money aside for a rainy day.
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