One’s perception of money is a funny thing. Take, for instance, my early feelings on stashing cash in an an “emergency fund.” At the tender age of 19, in my first apartment, I apparently felt that $500 was sufficient in case some unexpected expense came up. Now add in the fact that my monthly rent alone was $510, and you can get an idea of my naivete.
Many experts advise people to have at saved least 3 months worth of funds to cover basic living expenses in case of an emergency, and others advocate up to 6 months in reserve as part of a prudent financial plan.
This article from About.com is a good outline for creating an emergency fund.
How much do YOU think you’d need in reserve in case of an emergency, like losing your job or having to repair a car? Hopefully more than $500!