Big a cushion you need

In order to be a real automatic millionaire, I believe you need a cushion of at least three months worthy of expenses. Take what you estimate your spend each month, multiply it by three and you have calculated your goal for emergency savings.

If you typically spend $3,000 a month, you want to have at least $9,000 put away in a reserve account not to be touched unless there is an emergency. Should you try to save more? Absolutely, put aside anywhere from three to twenty four months worth of expenses, depending on your situation. How much you should save depends on what you feel you need to sleep well at night. Three months worth is a great starting place, but if you want to go higher, by all means do what feels right to you.

With all the economic and political unrest in the world these days, a years’ worth of expenses is great ultimate goal to shoot for. With that much saved, you do not have to worry about making ends meet even if you lose your job and cannot find a new one for a while. Even more important, one year cushion gives you the freedom to make discussions about your life that you might not feel about to make now, like whether to leave a job you do not like so you can risk trying a new career,