How much money should be in your emergency fund?

A good rule of thumb is 3-6 month’s of living expenses. This may vary depending on your individual circumstances. For example, if a person owns a small business that is very seasonal it would be advisable to keep 6-12 months saved due to the uncertainty of the cash flow. On the other hand, two tenured teachers could have somewhat less put away because the chances of both individuals losing their jobs is near zero. Life is filled with uncertainty. One way to prepare is to have sufficient funds in a safe FDIC bank account to deal with whatever is thrown at you. More importantly an emergency fund will prevent you from using high interest credit cards which if used the wrong way can lock you into a permanent cycle of debt.