OK, I know it is super boring, but 100% necessary. We need to get an emergency fund in place ASAP. Here’s what your emergency fund should include:
The rule of thumb is 3 to 6 months of monthly expenses saved; coming out of the recession it was 6 to 12. So if you are self-employed, have a commission-based job or have a household with only one income, shoot for 6 to 12 months. If you have a more reliable salary and two income earners in the household you can have a little less saved.
You want to be SUPER conservative with these funds. FDIC insured accounts only. Checking accounts are fine, but if you want to earn a little more interest I would suggest an online savings account. They are offering the best rates now, usually over 1%.
You don’t want to purchase CDs or any risky type investments with these funds. You need it to be totally liquid in the event you need access to the funds. You don’t want to have to pay penalties or sell at losses to get to your cash!