Cash reserves are important. That being said, I cannot tell you how much of a reserve the proper amount is for you. First let’s address what I mean by cash reserves.

Cash reserves refer to the money an individual keeps on hand to meet emergency funding needs.
Short-term, highly liquid investments, such as money market funds and short-term CD’s, can also be called cash reserves.
Cash reserves are useful when money is needed right away for a large purchase or to cover unexpected payments.

Everyone has a different level of comfort, I know some people that are happy if they have $5000 in cash reserves and others who don’t feel comfortable unless they have at least $200,000 in reserves.

Where ever you fit in this range, please make sure you have your reserves in place. I call it “toe of the sock” money, the place you go to only if it really is an emergency.

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