How Much Savings Should You Have?
In order for you to determine how much savings you should have, start by figuring out how much you normally spend on your most important bills. Begin by reviewing your most recent bank and credit card statements to see how much you spend in. expenses over the course of three to six months.
While reviewing expenses its important to focus on essential expenses such as rent/mortgage payments, insurance premiums, spending on groceries and transportation, and debt repayment. Since you’ll most likely begin to drastically cut back on things such as spending on dining out and other entertainment those aren’t as important as other expenses you’ll need to cover without falling into debt.
Let’s use an example, say your core monthly expenses come to a total of about three thousand dollars. You would want to have a least three times that amount (which would be nine thousand) in savings. To get more peace of mind, you can aim for about eighteen thousand as a balance which would be about six times the monthly expense figure.
The general rule is to have about six months of expenses saved however you can certainly opt to save more. Sometimes it is fitting to have more than six months incase you lose your job in which case saving up to twelve months worth of expenses would make sense.