US households have the impression that they are living comfortably and earning well enough for themselves. But a survey asking about unexpected expenses revealed that these households do not have enough for emergencies and may end up in debt. This begs the question: How much savings is enough?
What you should save at the very minimum
American financial adviser, Dave Ramsey, suggests setting aside $1,000 as a good start in savings. This is far from enough but having this amount for emergency car repairs or medical expenses will keep you from borrowing and getting into debt.
To save for a rainy day, or when a layoff is possible, having at least three months’ worth of savings should be enough to keep you going. This does not mean you can live lavishly as before but utmost frugality should be observed until a secure source of income is certain.
A bit complicated
It is very difficult to peg an amount for a nest egg as there are other things to consider. Your status in life will make a big difference, like if you are single, or married, or have children. The more people you are responsible for, the bigger the savings you need to set aside. Ditto for single people who live alone, or with roommates, or still live with parents. Each has different expenses and choices on what expenses to cut to survive without any income. Another thing to consider is debt. A debt-free person does not have to worry over monthly payments while a person in debt has to set aside extra funds to make sure not to miss those monthly payments.
Even if we have different circumstances and needs, we all have to start saving and build a nest egg to be ready for a rainy day.