How much should I keep in my emergency fund?

From FinancialPlanning

A rule of thumb commonly mentioned on MIFP is to keep from three to six months of living expenses as an emergency fund. Like all rules of thumb, that might be an acceptable suggestion for the average person, but not very useful when applied to individuals.

How much to set aside depends on your personal preferences and likelihood of having the typical emergencies or other cash needs crop up. If you have a very secure job with steady income, carry insurance with low deductibles to cover any conceivable mishap, and have plenty of available credit to tap into if needed, your emergency fund might be small. On the other extreme, if your income is very irregular -- you're a freelance writer working on a book -- your emergency fund might represent a year or more of living expenses.

Some posters on MIFP have suggested that an emergency fund isn't really necessary for many people, because of the ease of borrowing using credit cards or home equity lines of credit should the need arise. That's the minority view though, and others have pointed out that should a true emergency arise, these sources of funds might not be available, or might make a bad condition worse. The last thing you want to do is run up a big credit card balance to cover your rent or mortgage, at a time that you are looking for work and have no income.

Keeping a larger emergency fund may be more acceptable to you if you put the money to work.