Fearless Finance generally recommends 3-6 months of Emergency Savings. Deciding how many months is both financial and psychological. If your job is very secure, you are single, and young and healthy, 3 months should do it. If you like a lot savings to sleep at night, go for 5-6 months. Ask yourself these questions to help you decide:
- would it take you 5 to 6 months to find another job with the same pay if you lost yours?
- Does anyone in my household have a chronic health issue that prevents them from working sometimes?
- Do I feel stress or insecurity if I don't have a lot of money saved in case I have to move or change my life dramatically?
If you answered 'yes' to any of the questions above, we recommend 5-6 months of Emergency Savings. If your job is very secure and your health is good, you can decide how much you need within this range to feel comfortable.