Savings Reserve Common Sense
Imagine your savings account as a safety net, a financial cushion that can protect you from unexpected expenses or income disruptions. But how much should you have in this safety net? It really depends on your stage of life and your expenses. Generally, a good rule of thumb is to have anywhere from three to six months of your expenses, not necessarily your income.
So let’s say, for example, you make $10,000 a month as a household, and you’re saving about $3,000 a month. That would result in $7,000 of expenses. So a good rule of thumb is anywhere from $21,000 to $42,000 that you would keep in your savings.
This would be to cover the unexpected things. You need to replace a vehicle, your house water heater goes out, or maybe you lose your job. It allows you flexibility, so you’re not running to the first job that you find, and it allows you time to really search for the job that you actually want.
Need help determining how much savings reserve to keep? Reach out to us at 307-721-1725 and we can help you determine what makes sense for you.
Disclosure: Although Markle Financial LLC may take efforts to mitigate risks, certain risks cannot be eliminated or controlled and there are no guarantees that any risk management strategies or investment strategies implemented will be successful notwithstanding such efforts to mitigate risk. Markle Financial LLC does not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
