Keeping money in a bank is the most common way for people to manage their income. However, what is the exact amount should people keep in the bank? Well, a hundred people will have a hundred different answer as it depends on each individual’s financial situation. If you are struggling about managing your money in a smart way, here is a method you can follow.
-Dave Ramsey’s method
Dave Ramsey is one of the most successful financial advisors in the U.S. He was once go bankrupted at his age of 28. Now, his net worth is approximately $55 million. His story tells people that it is possible to turn a bad financial situation around. Dave Ramsey suggests to breakdown your income into small pieces and show them as percentage. For example, you need to calculate how much money you need for living such as food, housing, transportation, utilities, and etc. Also, list other major spending such as insurance and medical. Having such list would help you to be clear about your monthly spending and how much remaining you have for each month. Since unexpected things may happen, beside regular spending, it is recommended people have emergency fund in their bank account as well. Ramsey suggests putting around 10%-15% of your budget as your emergency fund. Also, other financial experts recommend individuals should have a cash stash which could cover at least six months of their expenses. It means you need to save at least $18,000 if your month spending is equals to $3,000.
We can see that more and more people have realized the importance of having enough money in their savings during Covid-19 period in 2020. As a result, manage your money wisely and start making your financial plan today.