facebookDo we keep 6 months of emergency funds based on income or expensed? - Seedly

Advertisement

jiajing wang

08 Jun 2021

SeedlyAMA

Do we keep 6 months of emergency funds based on income or expensed?

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?

Discussion (27)

What are your thoughts?

Learn how to style your text

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

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.

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!

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.

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...

Write your thoughts

Advertisement