I’m sure you’ve heard a thousand times or more that you need to put money away “for a rainy day.”
But have you ever wondered, “exactly how much?”
Of course, for each of us the potential cost of that “rainy day” differs – as well as the budgetary impacts such a day would have.
The well-known “rule of thumb” when it comes to the size of your emergency fund is 3 to 6 months’ worth of expenses. The source of that notion, however, isn’t clear and why it gained status as conventional wisdom is even murkier.
A recent article on MSN notes that the most common rainy-day emergencies tend to cost less than $2500 – in fact, they’re much more common than those that exceed it.
In fact, putting more than that amount in a low yield, high liquidity vehicle like a savings account can actually hold you back from achieving your long-term financial goals – especially for those households who can afford to save more.
Rainy days will someday hit everyone – that’s a fact of life.
The key is to prepare wisely, not only for that day, but down the road long after those temporary storm clouds disappear.
Helping you establish a balanced, solid financial foundation that protects you throughout all the seasons of life is what we specialize in here at Matson & Cuprill. Give us a call at 513-563-PLAN (7526) or book online to set up your free “no more rainy days” review today.
Dan Cuprill, CFP®