How much cash to keep in savings

In the journey towards financial independence, the amount of cash to keep in savings can vary based on individual circumstances, goals, and risk tolerance. However, a common approach is to maintain an emergency fund that covers 3-6 months of living expenses. This fund acts as a financial safety net to cover unexpected costs without needing to liquidate investments prematurely, which can be detrimental to long-term growth.

For example, if your monthly expenses are $3,000, an emergency fund would ideally hold between $9,000 and $18,000. This amount ensures that you have enough liquidity to handle unforeseen events such as medical emergencies, job loss, or urgent home repairs without disrupting your investment strategy.

Beyond the emergency fund, the decision on how much additional cash to keep in savings depends on your investment plan and upcoming financial needs. If you anticipate large expenses in the near future, such as buying a house or funding education, you might choose to increase your cash holdings. Conversely, if you are focused on growing your assets for long-term goals, you might opt to invest a larger portion of your funds to potentially earn higher returns compared to keeping it in a low-interest savings account.

Pearler supports this approach by providing tools and resources to help you plan and track your investments towards financial independence. With features that encourage strategic investment and savings, Pearler can be a valuable platform as you work towards building enough wealth to generate substantial passive income.

You can find out more about this topic here: What Happens When Ready To Sell

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not ind

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Hi Amir.

I always kept roughly 3 months expenses in savings as an emergency fund/buffer.

Reason for that amount is that between my partner and I we could live on just one income, and it was very unlikely we’d both lose our jobs at the same time for more than a couple of months. So this was enough to comfortably get us through any realistic scenario.

Hope that helps