Step 5. Prepare an emergency reserve fund.
Ideally, you want to have enough cash on hand to cover three to six months of essential living expenses if you lose a steady source of income. Depending on the level of job guarantees, you may want to increase the number of months for the amount of reserves. For example, individuals who work alone may want to have a cushion for the whole year, especially if their incomes by natural fluctuations.
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