Graduation

 

your bank. That way, if you really do end up needing the money, it will be there for you. In the meantime, you're free to invest your funds in more productive ways.

"Having said that, let me repeat that it is important to keep a few thousand at your fingertips. Minor emergencies not only can happen, they do happen! Especially if you're a homeowner! Also, if you have a couple of thousand in the bank and you see some item on sale that you really want, you can buy it. People with small bank balances are too often forced to pass up excellent bargains. And finally, having a couple of thousand dollars in the bank is good for your peace of mind. People sleep less soundly at night when they know that they have only one hundred and sixty-eight dollars in their account."

"What do you mean, 'only'?" Tom roared.

"Roy, you mentioned that a business owner might be wise to have a substantial emergency fund. Does that in-clude me?" inquired Cathy.

"Obviously a business owner, or a commissioned salesperson whose income is unpredictable, is smart to save for a rainy day. It's surprising the number of stockbrokers, for instance, who raise their standard of living during good times to match, or even to exceed, their temporarily high income level and don't set aside any funds to help carry them through the inevitable bad times. Cathy, whether or not your business should be considered cyclical in nature is your call.

"People who have little job security are also smart to maintain a substantial emergency fund. Again, of course, the decision rests with the individual involved. Frankly, someone like Tom has a much greater chance of being laid off than someone like Dave does. So, Tom should plan