The rule of thumb is to have savings equal to three to six months of bare bones living expenses to tide you over should you find yourself temporarily out of work. For most people bare bones is food, housing, utilities, transportation, insurance, medical, clothing for growing children and a small allowance for personal expenses. If private school and summer camp are essential to you, include them in the bare bones budget, too. Once you've crunched the numbers and know how much you need to save, you need to find a better place than your savings account to stash the cash. The Diva will help you look at some options.
Money market accounts Money market accounts are savings accounts offered by banks and credit unions.
The average rate last month was 4.44 percent. The Diva prefers other savings vehicles over money market funds to money market accounts, and explains why below. Money market funds Money market funds are mutual funds sold by the same folks you buy your stock mutual funds from, such as Vanguard, Fidelity and Janus. You pay a dollar a share, and although there's no guarantee, you can expect to sell them for a dollar a share. They come in taxable and tax-free varieties.