Saturday, July 18, 2009

Money Management: Emergency Buffer

Life is full of uncertainty. Therefore, your life might be miserable without emergency buffer. For example, how long can you sustain your current lifestyle without a job?

Under normal circumstances, we should keep at least 6-month worth of living expenses as our buffer. If your monthly expenses are $2,000, you should have at least $12,000 as a buffer in you savings account.

If you do not have one, start now. Do not invest until the buffer is well accumulated.

Be prepared.