Three Types

There are three types of saving. The first is emergency savings for the unexpected like a job layoff or an illness.

The generally accepted emergency savings should be three months of basic living expenses like food, housing, transportation; however, I would suggest 6 months. The average successful professional job hunt takes more than 90 days.

These funds should be accessible. Do not tie them up in CDs but place them in safe, risk-free accounts like money markets.

I suggest money market accounts (preferably at a mutual fund company) versus the bank's offering of money market because of the rates of return. We use the Prime Money Market at Vanguard which was paying over 5%.

With the rate adjustments, I expect it to fall to 3.25% very soon. Still, we take no risks with that $.

I'll cover the three other types of savings in the future.

'til later