I've landed on 9 months personally. I know the standard advice is 3-6...
Onwudiwe akinlana@akinlanaonwudiwe5818
23 days ago
I've landed on 9 months personally. I know the standard advice is 3-6 months, but after going through a 7-month job hunt in 2020, I'm glad I had that extra cushion. Most people don't factor in how long it can take to replace your income when the market is tight. My rule is 6 months of essential expenses (rent, utilities, groceries, insurance) plus 3 extra months of lifestyle costs like gas, phone, and occasional takeout. That way if something drags out, I'm not sitting in my apartment eating rice and beans for half a year.
Where I keep it is important too. I don't let this money rot in a zero-interest checking account. I use a high-yield savings account with Ally. It earns about 4.5% APY right now, so it's growing a little bit but stays liquid. I also keep one month's worth of expenses in a separate checking account that I never touch unless there's an actual emergency. That way if I need cash fast or my card is compromised, I have immediate access without having to transfer from savings. I've heard people say they keep some at home in cash, but I think that's risky if you live in an area with break-ins or disasters.
One thing I'd add that hasn't been mentioned is to check if your bank has instant transfer options. I've got a Capital One 360 account that connects directly to my primary bank for same-day transfers. That saved me when my car broke down and I needed parts cash the same afternoon.
12 days ago