Cash Reserves

Your emergency fund, or cash you put away and can easily access for known near-term costs and also (perhaps more importantly) unforeseen problems and expenses. You should have six to nine months of cash reserves in a place you can get at when you need it, typically in a savings account, money market account, CDs, etc. Companies should have cash reserves, too—and if they don’t, just like you, they can face bankruptcy.

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