Personal finance guru Suze Orman has long been a proponent of saving, and since the recession in 2008, she’s been vocal about increasing your emergency fund to 8-12 months’ worth of expenses. But that’s not enough — Orman tells Marketwatch Picks that she’s realized it’s actually essential for people to have two separate emergency funds.
Why 8-12 months of expenses? In 2008, Orman says she learned that it takes about 8 months, or possibly 12 months, to get a new job during a crisis. “The most recent testing of a true collapse in the economy was in 2008 and on average it took 8 months for somebody to get another job.
Suze Orman’s “unknown” emergency fund Secondly, you need an emergency fund for “unknown” expenses — which you save on top of the 8-12 months of expenses in the “known” fund. This is for unexpected emergencies like, say, an unexpected home repair.
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Source: Reuters - 🏆 2. / 97 Read more »