Is a $1000 Emergency Fund enough?
Many people latch on to any advice given by prominent experts of a field. When it comes to personal finance, one of the most prominent is likely Dave Ramsey, who advises money savers to put $1,000 in an emergency fund before working to pay off high-interest debt.
The problem is, some people take this the wrong way, assuming that is the most they should save. In reality, the amount you need to save depends on your personal circumstances. Is $1,000 enough for you?
When $1,000 is Plenty
Experts often recommend that you save enough for three months' worth of expenses in your emergency fund. Not everybody can afford this though. If you have a low income or high credit card debt, $1,000 may be the most you can afford, and it should be enough to cover most emergencies.
When $1,000 is not Enough
If you are self-employed, are the sole provider of your home, own a house or have children, $1,000 may not be enough.
It is ideal for self-employed people to have more than $1,000 in their emergency funds because business income is not always consistent. When you don't have a sufficient amount in savings, it can mean you will take on jobs that don't quite align with your business or you may even be forced to take on additional work to make ends meet.
As most people with a mortgage know, the sump pump does not care how much money is in your emergency fund when it decides to go out.
Parents should have a larger savings account solely because they have other people relying on them for financial support. The need for emergency expenses increases quite a bit with children.
Consider saving more than 3 months' worth to put in your emergency fund if you fall into any of the above situations.
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