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Many financial experts urge people to have an emergency fund. What is a good rule of thumb for determining what dollar amount is enough?


The longstanding conventional wisdom is that it’s prudent to have six months of living expenses on hand in case of a job loss, an illness in the family or some other acute situation. But times have changed, and not in a way that makes people feel more financially secure. Unemployment remains stubbornly high, above 9 percent. The inability of the housing market to stage any sort of meaningful recovery continues to leave millions of homeowners with precious little equity, too, limiting their borrowing power and potentially closing off one avenue of emergency funding. In such an environment, it may be sensible to have enough cash on hand to cover one year’s worth of expenses, or at least to have sufficient cash plus credit available to meet that goal. But while it may be sensible, it’s also likely to be hard to achieve.
-Conrad de Aenlle