How Much Cash Should You Have For A Rainy Day

<p>Do you have enough money in the bank for your rainy day fund? What amount is too low or too much just in case you need it?&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks about setting the cash target. Ideally, you&rsquo;re not over or under. By knowing what you need to get to, you&rsquo;re empowered to make better decisions to reduce stress and risks, and increase return on your dollar.&nbsp;</p> <h3><strong>Topics Discussed:</strong></h3> <ul> <li>Before Building Emergency Reserves: <ul> <li>Have at least one month of expenses in checking account</li> <li>Pay off prior credit card debt and loan balances</li> </ul> </li> <li>Start Building Up Reserves: <ul> <li>Set the target by saving three to six months of income/expenses</li> <li>Personalize range based on your situation (1 to 12 months)</li> </ul> </li> <li>Risk Factors and Reasons for Reserves: <ul> <li>What do you own that has upkeep costs? Houses, cars, and boats</li> <li>How large is your household? Single, married, and children</li> <li>What is your insurance deductible? Change if necessary</li> <li>How much does your household earn and how secure are earnings?</li> <li>What percentage of income is being spent versus saved?</li> <li>How diversified are your income sources?</li> </ul> </li> <li>Ideal Target: Establish emergency reserves and put in a bank savings account</li> <li>Common Mistakes: <ul> <li>Commingling rainy day savings with other savings accounts</li> <li>View as insurance policy, not as a return or way to maximize investment</li> <li>Don&rsquo;t use credit card or HELOC debt as alternative to emergency reserves</li> <li>Revisit and adjust ideal target; don&rsquo;t set it and forget it</li> <li>Get some kind of return on your reserves, just don&rsquo;t get greedy</li> <li>Use actual, not estimated expenses to calculate your rainy day reserves</li> </ul> </li> </ul> <h3><strong>Links:</strong></h3> <p><a href="https://wrennef