Scott Tucker, president and founder of Scott Tucker Solutions in Chicago, recommends having enough cash to cover three to six months of living expenses in an emergency fund, which includes rent or mortgage payments (including property taxes and insurance), utility bills, transportation costs and food.
To that end, he suggests auto-withdrawing 10 percent of every paycheck into a separate account such as a Roth IRA. "If it's in a Roth IRA, there's less incentive to touch it but they could still withdraw early without [having to pay a] penalty or taxes," he said.
Horter advises having a minimum of six and preferably 12 months in a money market account or laddered CDs to cover monthly expenditures in the case of a job loss or illness.
If possible, set excess money aside, rather than cut back, he said. "Look at take home pay versus expenses. If the difference is $300, put that money away," he said. "You have to be able to live, but you also have to be able to save."
"You don't want to wind up hating that money," he said.