Jane and bill collins have total take-home pay of $5,250 a month. their monthly expenses total $4,600. calculate the minimum amount this couple needs to establish an emergency fund.

The bare minimum should be 15,800 dollars while it could save up to 31,600 fora more robust emergency fund

Explanation:

The emergency fund should be saving in a highly liquid position for the amount between three and six months’ worth of expenses. The liquidity is important as if a burden occurs the couple has a few months of additional expenses cover.

In this case as the monthly expenses are 4,600 the minimum emercgency fund sghould be three months of these expenses:

4,600 x 3 months = 15,800 dollars

while a most safety amount would be around 6 month:

4,600 x 6 months = 31,600 dollars

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