Experts recommend that you keep enough money in your emergency fund to cover at least three to six months’ worth of living expenses. This may vary based on a number of factors, including: your lifestyle, the cost of living in your area, your income and the long-range security of your job, the job market for your line of work.
In a word, no. Your savings account should stretch to cover periodic but not unexpected expenses such as routine home and vehicle maintenance, vacations, and gifts for special occasions.
You should also have enough regular savings to pay for acute emergencies like replacing your car’s tires or paying off credit card debt. These aren’t true emergencies because you know these things will occur at some point, but you can’t always predict when they’ll happen so you should still plan for them.
As much as you may want to save for your children’s future, don’t neglect yours in the process. Our advice? Get your retirement account started today and contribute to it regularly. Then decide if and how much you’ll contribute to your child’s post-secondary education.
If you do plan to pay for some or all of their college, begin setting aside money and making other financial preparations as soon as you decide.
Researching and applying for scholarships. You might also consider other forms of support such as letting them live at home while they pay their way through school themselves. As much as you may want to save for your children’s future, don’t neglect yours in the process.
Determine what’s essential to your budget and what isn’t. This will show you how much money you need in your emergency fund to get you through tough times. Essential expenses include: Rent or mortgage, utilities, car payments, groceries and healthcare.
If the unthinkable does happen, the sooner you can gather your wits and take steps to get back on track financially, the better.