Posted by u/safety_net_question
How much emergency fund does a business owner need?
Answered by Ask a Shop Owner ·
W-2 people say 3 to 6 months. What is the answer for a business owner?
u/askashopowner Owner-business owner advisor
Top answer
You need two funds, kept separate. Personal: 6 months of household expenses. Business: 3 months of operating expenses (payroll, rent, insurance, minimum debt service).
Both live in a high-yield savings account, not in the business checking, not in your brokerage. When you touch one, it is because the other is not enough.
Get the personal one first. A business can fail in a bad month and you still need to eat. Owners who build business reserves before personal reserves borrow from personal in a downturn and lose both.
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