How much of emergency savings should one have?

Unfortunately, the answer is 'Depends'. It varies based on how much you earn, your monthly commitments, upcoming major unavoidble expenses, your risk tolerance, nature of your job and your industry.

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The general advice is 6-12 months of expenses as others have chimed in but in my view, it varies. If you are a STEM major, especially computer science with strong coding skills, you may get by with 1-2 months of savings since moonlighting for money is possible and based on your skills and their level, quite rewarding. Now if you are graduating in history or sociology or such, a year may not be enough! If you have no other commitments except living expenses (college fees paid for), I reckon 6 months of expenses should be good enough; 3 if your parents can still support you.

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For working folks, the same logic extends but other considerations like credit card balances, loans, and then mortgage, school fees, etc, come into the picture at different stages of life.

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Personally, I keep 3 month equivalent of my total compensation (not just expenses or salary but cash equivalent of salary+bonus+restricted stock) in my bank account. Obviously you add in money when your salary increases (hopefully every year or when you change jobs).

Hi anon,

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I'd generally recommend at least 6 months of your expenses, and if possible up to a year.

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Considering that you are currently studying (full time?), I believe you would be sustaining yourself with either an allowance, a stipend, or some part time work.

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I personally went through university with a low 4 digit amount in my bank account for most part, but I did get a job straight out of university, and started saving aggressively. Looking back, if I didn't land a job back then, my bank savings would probably have lasted me another 6-8 months as I wasn't spending very much. Once I started working, my expenses crep up a bit futher.

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So I'd recommend looking at your expenses, and if you don't have any idea how much you are spending each month, it might be good to start by recording things down for a month. You'll probably spend lesser when in university, and more when you start working. Review and adjust accordingly.

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Of course, the more savings you have, the better, there can never be 'enough' in a sense, but if you have too much funds idiling, you should put some to work, provided you have active income coming in.