Set Aside Enough Money

A good rule of thumb is to have a certain amount of money set aside as an emergency fund.

QUESTION: Listener asks how much you should have saved in your business emergency fund. His gross sales are about $100,000 and he has one and a half months of general and administrative expenses saved. Dave says he’s not too far off from what he needs.

ANSWER: I think you’re getting pretty close. I think if you can build up as much as six months of expenses set aside for retained earnings, that gives you tons of opportunities to do things and directions you can go, and it just gives you a lot of peace.