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Figuring out how much to set aside in a rainy day fund isn’t a one-size-fits-all proposition, though the rule of thumb of three to six months of living expenses is a reasonable guideline—and one that is widely disregarded.

According to surveys, two-thirds of American households earning less than $100,000 per year do not have enough available cash to handle $10,000 in un-expected costs. Other studies note that one in four Americans has more credit card debt than emergency savings. What is the result? A dependence on credit to get through the rough times. And, when reliance on loans and credit cards changes into a lifestyle, disciplined saving takes a back seat. Consider these questions when deciding how much you need to stash in your emergency fund.

1. How stable is my job? If you’re in a relatively secure position with your company or organization, you may not need to set aside as much for emergencies as someone in a highly volatile industry that is prone to layoffs. Think government versus tech startup jobs. Of course, as the last recession made abundantly clear, the expectation of one career at one company is no longer common. So it makes sense to err on the side of caution

2. What are my necessities? Think day-to-day costs, not salary. Plan for your emergency account to contain adequate funds to cover fixed costs such as mort-gage and car loan payments. Put expenses for food, transportation, child care, insurance, and utilities on the list too. If you lose your job or a medical crisis looms, costs such as dining out, new clothing pur-chases, and cable television subscriptions may need to be reduced or eliminated.

3. Do I have other sources of income or assets? In a true emergency, you might need to cash out a mutual fund or sell an existing asset. These non-salary sources can reduce the amount of cash you need to draw from your emergency fund.

If you run the numbers and still feel overwhelmed, remember that even a small amount set aside from each pay-check will accumulate over time. Make your deposits automatic, so the money is swept from your checking account to a savings account. Then forget about it until that rainy day arrives.

Contact us for assistance in establishing an adequate emergency fund, as well as budgeting tips to help you achieve your goal.

Khorshed Alam is a practicing CPA and business valuation analyst. He is the Presi-dent and CEO of Alam Accountancy Corpo-ration. Check out or call (408) 445-1120.