With 800,000 federal employees being furloughed or working without pay, many stories have been reported about people having difficulty paying their bills including mortgages, rent, car payments, and student loans.
How much money should consumers have for an emergency fund? The standard recommendation is three to six months of expenses.
To make your calculation, estimate the costs of housing, food, health care including insurance, utilities, transportation, personal expenses, and debt. Things you can cut from your budget – such as entertaining, eating out, shopping, vacations, and savings – don’t need to be included.
You may want to include more than three to six months of expenses if your income isn’t steady if layoffs are common in the type of job you have, or during a recession.
If your budget is tight, start by saving small amounts of money each week, $25 for example.
Put your money in a place where you can get at it easily and quickly. Money market funds work well because they’re easy to access and you make a little interest.
Only 29 percent of adults say they have that six months’ worth of emergency expenses, according to a Bankrate survey.