An Emergency Fund

 An Emergency Fund

 An emergency fund--money that's
readily available to meet unexpected
expenses--is really the foundation for
any successful financial plan. Without
money to fall back on when an
unexpected expense crops up, you
may be forced to tap into savings that
you've earmarked for retirement,
college, or another savings goal. But if
you have an emergency fund, it will be
much easier to handle a job loss, a
temporary disability, or some other
event that might prevent you from
saving for the future or even tempt you
to pile up debt.

How much is enough?

insurance? Do you have other assets that you could tap without penalty in an emergency?
Where you keep your emergency fund is also important. In a jar is probably not the best idea. You'll want to keep your money in an account where it's readily available, but you'll also want to receive as high a return as possible. Rarely do you write one check equal to six months or even three months worth of expenses, so you may only need part of the fund in something as liquid
as a savings or checking account.
The balance of the emergency fund can be held in something with the potential to  achieve a higher return, but that you can still
access in a day or two.

A popular rule of thumb is that you should have an emergency fund equal to three to six months of your living expenses. But should you save three months, four months, five months, or
six months worth of your expenses?
The amount you should have depends on many factors. How stable is your income? Do you work in an industry
where layoffs are common, or are you
in a growing field? Do you have
adequate health and disability

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