I am all for having an emergency fund, but would also advise people in work to budget for insurance policies to cover major payments should they be unfortunate enough to lose their job. Knowing your car (and other major) payments will still be made puts less pressure on the savings you have managed to get together as back up.

I agree, and the more you have in savings the better off you are. Unfortunately, some people are not able to save that much, and live paycheck to paycheck. I agree a year would be ideal, but I generally use the 2 months rule as a minimum guideline.

The size of the emergency fund recommendations has increased to one year due to the turmoil in global economies over the past few years. Many people are having a very difficult time finding a new job when they lose their old one and you need enough savings to get you by until you can find an equivalent.

Interesting as I always heard six months. As was mentioned, it is good to get something as backup even if it is not one year or six months. In life, "stuff happens"!

Wow, only a two-month savings. I always thought it was more like a year. I would not feel comfortable with only a two-month savings. We are living in a tough economy, it might take longer than two months to find a new job.

All great advice. A good rule of thumb is to have an emergency savings for you to live off of for 2 months. I know some people can't do that, but if possible that is a good metric to use for your emergency savings fund.

Postman wrote: I heard that some people don’t like to save on the special cases like emergencies. When asked, they say that they don’t like the idea of thinking about accident. They are afraid that the negative force will make this come true. Are you one of those people?

I think this type of thinking is a huge mistake, but I also understand what you're saying. People who don't want to think about saving for an emergency because then an emergency might happen are the same people who don't want to talk about buying life insurance because then they might die. Personally, I am a hoarder of money for the "just in case" moments in life.

Unexpected things situation or emergency can come at any turn of life and you must be ready to tackle it smartly. To tackle emergency you have to be strong financially and to be strong you need to secure good amount of money on regular or monthly basis.

Hey Meya, I know that son, 'bad luck, say what you got, what you got, bad luck...'

Seriously, no one wants to be in the same situation all the time and I hear Unicorn40. What I would suggest to her is to have a very small savings goal that would not hurt her like say $20 per pay. Have that amount auto deducted to a savings account so that she doesn't have to touch the cash and be tempted.

Before you know it, after 6mths she would have $240 and after a year, $500. I know many people who make decent money and have NOOO savings so it is not how much you make but what you do with it.

Try this.

This is great advice, I may try to put a side a little each pay check.

Hey Meya, I know that son, 'bad luck, say what you got, what you got, bad luck...'

Seriously, no one wants to be in the same situation all the time and I hear Unicorn40. What I would suggest to her is to have a very small savings goal that would not hurt her like say $20 per pay. Have that amount auto deducted to a savings account so that she doesn't have to touch the cash and be tempted.

Before you know it, after 6mths she would have $240 and after a year, $500. I know many people who make decent money and have NOOO savings so it is not how much you make but what you do with it.

Try this.

Dont let it stress you out or anything. Half the time when you save money, something besides and emergency is going to step in the way and cause you to drain it right back out. That is why I like the song "Bad Luck" by Harold Melvin and the Bluenotes when he says, "If it was not for bad luck, I would have no luck at all"

I would like to be able to save for emergencies but being a single mom with two boys and a job that doesn't pay well it is hard. I have a 401k that I have from a job that I was layed off from, I am fully vested but it is losing money, I have a cd and a pension from an old job. I wish I had more money for emergencies.

I agree that it is hard. However, I put away over 10% of my before tax pay in my 401k and I don't miss it. Now, I am trying to put away at least 5% of my after tax take home pay in a savings account.

It is hard but for my financial well being and future, I HAVE to or I will be caught out in the rain without an umbrella and I have heard that getting hosed financially is not a good feeling.

It is tough saving for emergenices. Especially if you are trying to pay off credit card debt. I am happy that I did not let my credit card debt get really out of control, like some of my friends did.

The rule of thumb is to have 3-6mths of emergency savings in liquid form i.e money market, savings, cds.

Especially in these hard times, I would say 6-9mths because it may take that long to get a decent job.

I'm not there yet but my current goal are:

1. Get credit card utility down to 30%- right now it is 34%
2. Stop charging- now I only charge on Chase Freedom card to get rewards and pay off as much as i can each month
3.Enroll in SL rehab program by Jan 2009
4. By April 09 have util down to 25%
5. Have $1500 saved by Dec 08.
6. Have business up and running by Nov 1
7. By April 09- have 4k saved.

I use to have lots of liquid savings but you know the saying Robbing Peter to pay Paul. I am in a new frame of mind- not charging, savign and not incurring any more debt. Also, having kids in college will drain you fast.