Cash needs will vary with stages of life, the stability of income, future uses for the cash, and how cash fits into your overall portfolio allocation. If you are holding what seems like a lot of cash, or are retiring soon, you may want to carefully consider how much cash you realistically can afford to hold.
Cash for Emergency Fund – Working Years
This is the minimum amount of cash to have on hand during one’s working years. It generally represents the amount of money you would need to pay the bills if you lost your job, at least until you could reasonably expect to find a new one. The “standard rules” for how much to have in cash:
- Three months of expenses for a younger single person (renting, living at home)
- Six months of expenses for an established single person (mortgage, car payment)
- Three months of expenses for a two-earner family
- Six months of expenses for a single-earner family
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Author: Suzanne Tudor, CFP®, J.D.*, MBA, Director of Financial Planning, HK Financial Services
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This material is being provided for informational purposes only with the understanding that neither HKFS nor ProEquities is rendering tax, legal or accounting advice. Please consult with your CPA or other appropriate advisors on all matters pertaining to legal, accounting or tax obligations and requirements. 8271851