There may be times when a significant amount of money is needed to cover unforeseen damages or other expenses. At such times, the so-called emergency fund is of great help. But what ideal size should this financial reserve be? Consumer protection can answer this question.

How high should the emergency fund be?

An emergency fund is a financial reserve that is explicitly set aside for emergencies such as sudden repairs, unemployment, etc. The problem: accumulating reserves on a regular basis is not easy for many people. If you can still afford it, you should prepare for financial emergencies through monthly savings or other methods. Experts explain what the amount of the emergency fund should be.

The consumer service center has very specific advice: it talks about a “buffer of two to three months' salary […]“to be able to face unexpected expenses at any time.” It is also recommended to invest adequate savings in a checking account. High interest rates are not expected here. But you can access it at any time.

By the way, the amount may vary depending on the type of home. Families tend to need more emergency funds than single people.

This is how you can save your emergency fund

After calculating the approximate amount of an emergency fund, the question arises of the best way to reach your goal. Depending on your financial situation, there are several options. Because it does not always have to be a fixed and high amount that is deducted from the salary. Just five percent of your net income per month is a good start, explains the consumer advice center.

Other measures may include:

  • Cash Gifts: Whether for Christmas, birthdays or other occasions, cash gifts are ideal as a contribution to your emergency fund. If you don't want to sacrifice everything, you can use a third or half, for example.
  • Holiday or Christmas bonus: If you receive adequate benefits from your employer, it is also worth setting aside at least a third.
  • Tax refunds: If you don't have to pay additional taxes but get your money back, you have another opportunity to save here.

There are some tricks for additional savings options. It should be useful to carry a 100 euro bill with you. At least one psychologist recommends this because he supposedly puts your expenses in a new perspective and makes you more aware of how much you are really paying.

Source: consumer advice center

By Dana Neumann

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