Eric Tyson’s Personal Finances for Dummies discusses this. He recommends putting your emergency fund into a tax-free money market with check writing privileges. I keep about 2-3% of my liquid assets in such an account, and maybe another 2% in checking and savings accounts at regular banks (one online, plus two local banks in locations where I live and work.) However the percentages aren’t as important as the absolute numbers. You need a local account (or a fire-resistant safe that’s rated for at least 60 minutes against tools and torch) for when you need a lot of cash right away, and enough cash across your cash accounts for maybe six months of living expenses.
Lines of credit can be useful, but banks do have an annoying habit of cancelling them at the worst possible times; e.g. when the whole economy is imploding as it did in 2008 and clients aren’t paying their bills either.
Eric Tyson’s Personal Finances for Dummies discusses this. He recommends putting your emergency fund into a tax-free money market with check writing privileges. I keep about 2-3% of my liquid assets in such an account, and maybe another 2% in checking and savings accounts at regular banks (one online, plus two local banks in locations where I live and work.) However the percentages aren’t as important as the absolute numbers. You need a local account (or a fire-resistant safe that’s rated for at least 60 minutes against tools and torch) for when you need a lot of cash right away, and enough cash across your cash accounts for maybe six months of living expenses.
Lines of credit can be useful, but banks do have an annoying habit of cancelling them at the worst possible times; e.g. when the whole economy is imploding as it did in 2008 and clients aren’t paying their bills either.
Typo: the link doesn’t work, and the link title should be “Personal Finance for Dummies”.
fixed. Thanks.