A) How much should an emergency fund cover?

Question

one month's expenses

three months' expenses

six months' expenses

twelve months' expenses

Answer 1

The recommended amount for an emergency fund to cover is typically three to six months' worth of expenses. This provides enough financial security to handle unexpected events such as job loss, medical emergencies, or major repairs. However, some financial experts suggest having an emergency fund that covers up to twelve months' expenses for individuals with more unstable job situations or those who have high levels of debt. Ultimately, the appropriate amount for an emergency fund may vary depending on individual circumstances and risk tolerance.