How Much Needed?
As the first post in a series of several financial recommendations…
So How Much Cash Reserve Do You Need For An Emergency or Opportunity?
In personal finance, cash reserves are primarily short-term, highly liquid investments that earn a low rate of return that individuals want to have quick access to…for purposes of meeting short-term, emergency or opportunity funding needs. We will discuss how much is recommended, how to create your cash reserve, where it should be kept and why it is so very important to your financial well-being!
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Ameriprise Financial
Refine your cash strategy
In times of crisis, you don’t want to be shaking pennies out of a piggy bank. Having a financial safety net in place can ensure that you’re protected when a financial emergency arises. One way to accomplish this is by setting up a cash reserve, a pool of readily available funds that can help you meet emergency or highly urgent short-term needs.
Read more:
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James Kenney on YouTube
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In my humble opinion, Cash Reserves are the cornerstone of the process of effective comprehensive financial planning. In order to know how much money you should allocate on a consistent savings plan for your cash reserve, it is necessary that you develop a budget which includes all of your income, expenses, payments, insurances, mortgage, fees…really everything that represents money incoming and outgoing…and then you will know what you will need per month so as to then calculate how you can save for your cash reserve. If your net outgo is $4000 per month then in order to save a cash reserve equivalent to six months of your living costs, then you will need a cash reserve of $24,000 to equal a six month cash reserve. Now that you know how much you need you can make determinations as to where that money will need to come from. A qualified financial advisor can be very helpful in achieving this.
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Dan Norris
Small Business Consultant
Author