If you are ready to prepare for an emergency fund you need to ask yourself these four questions to ensure your emergency fund will cover your needs.
The first question to ask yourself is what will your emergency fund be used for. This question sets the foundation for what your needs will be. If you have a house, you may expect to have some repairs come up. If you are in the middle of a job search, you may expect to be without a job for a few months.
The second question to ask yourself is what is your family status and level of risk you are willing to have? If you are single, you may not have as many financial emergencies, but if you lose your job, there is no one else to help you out. If you have a family, you may need to save more because others rely on you, but others can help you out if there is an emergency. Decide what level of risk you are comfortable with.
The third question is how much money do you need each month. If you track your spending and budget then you know how much it costs for your monthly needs. This is important to know how much you will need to save.
The fourth question is how much do you need to save in total? If you are single, you will want to save 6 months for your emergency fund. If you are married, you will want to save 3 months for your emergency fund. However, this can all be changed if you believe you need more or less.
