Ramit Sethi explains why he keeps 12 months of bare-minimum expenses in cash. An emergency fund this size covers fixed costs and protects against job loss, unexpected bills, or other shocks. It's boring, but it's the moat around your financial castle.
So for your emergency fund, I recommend you target 6 to 12 months of bare minimum living expenses. In the conscious spending plan, this is basically your fixed cost, so it's really easy to calculate. Once you have an emergency fund built up, you have major financial confidence because if something throws you a curveball like a flat tire, job loss, surprise bill, you know you can handle it. Now, a lot of people dismiss an emergency fund as boring. Yeah, it's boring until you freaking need it. This is the moat that you are building around your castle. I never want to expose myself to existential risk. I don't want you to do the same either.
