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I always see people Commenting to the community here that they need to ensure they have 6 months of savings for emergency funds. But some say is 6 months of your expenses while some say should be 6 months of the the salary.. Which is correct or let's say, better?
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Bjorn Ng
22 Dec 2019
Business Analyst at 10x Capital
Hi there,
6 months of expenses would be the base/minimum way to go, but for me, since I manage and feel that expenses < salary, I go for 6 months of salary just for that additional buffer/margin of safety.
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Hi JiaJang,
Actually 6 months is just a guide. You can choose to save more as well. Its all on your comfort. If you want to save 6 months of expenses is also good enough!
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Objectively, 6 months salary is the bigger pie so to speak and hence is the “better” one.
That said, different people will be at different stages. If you have difficulty saving 6 monthly salary before moving on to say the investment piece and you want to hit the metal while it’s hot, it’s not wrong to proceed on with just 6 months expenses.
Either way is ok I think.
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Cedric Jamie Soh
10 Dec 2019
Director at Seniorcare.com.sg
Both are right. 6 Months of expenses is a more accurate way, since it is like saying you have 6 mont...
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The rule from finances book is 6 months of EXPENSES
however it is purely up to u if u want to use income instead.
i feel expenses is more than enough for most pple