Key takeaways
- A reserve protects against income interruptions.
- Fixed payments simplify long-term planning.
- Keep liquidity accessible for true emergencies.
Right-size your emergency fund
Total your essential monthly expenses and multiply by six to twelve months depending on income volatility.
Consider a higher target if you are self-employed or rely on variable compensation.
Store funds where you can reach them
Use high-yield savings or short-term treasuries so cash is accessible within days if needed.
Avoid locking every dollar into long projects until your reserve is rebuilt.
Review the plan annually
Revisit your reserve goal each year as expenses and property values change.
Coordinate with your advisor to integrate the reserve into retirement, education, or business goals.
Action plan
Calculate your baseline expenses, define the reserve gap, and request a cash-out scenario that fills it.
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