Cash Reserve
Your cash reserve should be money that you never touch. Money that you can put away that helps you to sleep at night knowing that if you ever need it in an emergency it is there, but otherwise it’s just a ‘feel good fund’.
The amount you choose to put away in your cash reserve is entirely up to you. There are no rules about this. It’s really just whatever feels right.
Some people like to keep it to round numbers like £10,000, £20,000, £50,000.
Others will consider what they spend over six months and hold that amount in cash as the reserve. Some might want the equivalent of three or six months’ gross income as a cash reserve.
The important thing to remember is that this money is put to one side and never touched. Only in emergency situations would it be relied upon.
Because you never know when you might need it you’d probably want to have it where you can gain easy access to it. But because you may never use it, or not for a long time, you’ll also want it somewhere you can earn some good interest on it.
Read on...Short Term Money
