Most financial planners recommend setting aside six months' worth of living expenses in an emergency fund.
What if your "emergency" ends up lasting longer than six months? If you take the liberal view of living expenses that we've been taking so far, your emergency kitty likely will last a little longer. Further, we haven't included payments from unemployment insurance. If you do collect unemployment, your emergency fund should last longer, too.
Of course, you may not be able to pull all of your emergency-fund money together at once. Treat it as a goal. Maybe you can cover one or two months' expenses now. Add to that kitty over time. If you get a tax refund, put it in your emergency fund. A bonus at work? Sock at least part of that away.
But in general, don't invest elsewhere until you have a full emergency fund. (The exception to this may be your 401(k) plan. If your employer offers matching funds, you should strongly consider contributing at least enough to maximize your company's match. Otherwise, you are leaving money on the table with every paycheck.)
Where to Put the Emergency Fund >>