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

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

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.