In a study released this year, Pew Trusts (January 29, 2015), the precarious state of household finances in America was graphically illustrated and it doesn’t bode well for our ability to manage if hit with a job loss or illness were to leave us without an income.
What do you have available in liquid savings? How many days or months could you live off that savings? The Pew study found the majority of American households had savings that could only replace about a month of income. For low-income families, that number was even worse. Instead of 30 days worth of expenses, the low income families had only enough to survive for 9 days!
You owe it to yourself and your family to boost your savings so that you can weather financial storms without ending up living in your car or in a shelter. Some financial experts recommend three months, or six months or nine months of expenses as a cushion. You get to choose a number that makes you comfortable. I think we can all agree that you need more than a month.