An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. These unexpected events can be stressful and costly. Typically, it is recommended that you save somewhere between three to six months of expenses in your emergency fund.
What I’m suggesting is to have two types of Emergency Money, one is Emergency Fund which is one month salary saved for any quick emergency. The second is Security Fund where you will have to save gradually one year expenses in a cash account or a low risk investment like CDs or Gold.
The Emergency Fund will help you cover unexpected expenses like car damage, and health problem (if you don’t have insurance). And the Security Fund will help you if you lost your job or needed to take a year off to take care of a child without the financial worry.
