Building up a financial cushion is extremely important. But how big should such a nest egg actually be?
The washing machine breaks down, the car no longer starts or the laptop gives up the ghost - unforeseen expenses are annoying, but unfortunately they are part of the process.
Of course, you don't want to touch your own retirement savings or sell any of your belongings. It is then helpful to have something on hand that is intended precisely for such cases.
Everyone always talks about the so-called “nest egg”. Colloquially, a dime actually means a 10 cent coin. Of course, 10 cents is not a guideline. Such an emergency fund should be a little higher.
But how much money should I at least have in reserve? We'll give you a guideline with which you usually won't go wrong and will be on the safe side.
More about this:
With this account balance you are on the safe side
Unforeseen expenses can happen all the time. So that you don't have to accept any losses in this case because you max out your overdraft or have to sell shares, you should have a financial cushion that you can access quickly and easily in an emergency.
Basically, the emergency fund should be aboutthree to six months' salarybe. However, the amount depends on your monthly expenses and your standard of living.
Regardless of your investment strategy, your emergency fund should be the cornerstone of your financial provision.
This means that you should think carefully about what unforeseen expenses you might face and how much money you will need to have available.
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Where do I save my emergency fund?
It is best to park your financial reserves in a current account. Here you can access your money quickly, but there is still less risk of using the money for your everyday expenses.
You use the money in the checking account for your daily expenses, while the current account provides quick access to financial security for emergencies.
Reading tips:
If you are younger and have just started working, you will probably need to build up a financial cushion before you can invest money in ETFs or other investments, for example.
If you have already built up a good financial cushion, you should consider how to invest any savings that go beyond your emergency fund.
Because in times of high inflation and low interest rates, it is not worth having large amounts in your current account. This means that the emergency fund should be limited to a certain amount.
