Also known as your “Unexpected Expenses Fund,” the emergency fund is an important part of your financial plan.
The short answer is “anything is better than zero” and the amount that helps you sleep better at night is the “correct” amount.
The rule of thumb is generally something like three-to-six-months of your income. However, you might feel better with an entire year of income, or your circumstances might dictate more or less. The bottom line is that having cash on hand in a stable account is ALWAYS a good idea!