Financial Knowledge Assessment: Q6A

6.  What is the minimum amount of money you should have in savings in the case of an unseen emergency and/or job loss?

• A.  1-2 months of living expenses.
• B.  3-6 months of living expenses.
• C.  7-9 months of living expenses.
• D.  10-12 months of living expenses.

Explanation:  The correct answer is “B.  3-6 months of living expenses.”  Marines and Sailors can be very bad at planning for financial emergencies.  Financing too many unnecessary items, especially new cars, will diminish the amount of money per month you are able to save, if you’re saving anything at all.  If a Marine or Sailor is living “pay-check-to-pay-check,” as it is said, this means that you will not have any money available for an emergency, and should an emergency arise, costs may have to be covered by loans, perhaps creating a financial crisis.  Hence, the solution to this problem is to create “stand-off.”  Have enough money saved up to provide for you and your family in the event of job loss or other emergency.  As a guiding rule, this means about 3 to 6 months of pay.  While “C” & “D” are better answers in a perfect world, it must be acknowledged that this amount of money for a service member providing for a family may be difficult to save up.

Continue to Question 7