What is an Appropriate Percentage of Income to Allocate to an Emergency Fund?

[Suba]

Many people are confused about determining an appropriate percentage of their income to an emergency fund. Of course, there's no specific rule; any percentage is better than no funds allocated to an emergency fund. This depends primarily on each person's financial situation. No matter how small the percentage, the important thing is to allocate it regularly and consistently. So, you can determine the percentage you'll allocate anywhere from 1% to 20% of your income. Choose wisely so it doesn't interfere with meeting your monthly needs.
Agree or Disagree?

 

[Tobi]

take this question as how much one should keep as emergency fund. This depends on the individual financial circumstances, job security, etc. This emergency fund is kept to manage any unexpected future events. I want to term this as ‘cash reserve’ as this will be used for other than emergencies also.

Ideally one should have 12 months to 24 months of household expenses as cash reserve At least six months of household expenses are a must.

 

[Starmix]

It all depends on the income of the individual. If he's lucky to have a good and stable income either from his work or business, he might allocate 20 % for his emergency fund or higher than that to those big time business owners.

 

[Augusta]

Basically, it is just to give it a percentage that you would be comfortable with. No need to over stress yourself

 

[Fire&Rain]

I think this is sensible advice. There’s no perfect percentage, it depends on your financial situation. What matters is setting aside money regularly, even if it’s just a tiny fraction of your income. Allocating anywhere from 1% to 20% is reasonable, as long as it doesn’t affect essential spending. Over time, consistent contributions create a solid emergency cushion.

 

[Augusta]

I believe that 5% of it is no bad idea. We can start all the same with what we can for a start

 

[eLdavis]

Personally I don't think there is a specific amount for this, the key is to ensure that you are able to save something.

 

[Augusta]

Yes, you don't have to get one in particular. You can have to go with the flow you are comfortable with.