Experts recommend setting aside one to two years' net pay in an emergency fund.

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Topic at hand is whether experts recommend setting aside one to two years' net pay in an emergency fund.
Option 1: True. Explaining why this would be considered false, many financial guidance sources advise an emergency fund of a smaller multiple of your monthly expenses (commonly 3–6 months of living costs or after tax income), rather than a full year or two of net pay. Accounting for taxes, debt obligations, and liquidity needs, socking away 12–24 months of net pay is typically impractical for most savers and could tie up funds that are better deployed toward paying down high-interest debt or investments. This makes the statement overly aggressive for a general audience.
Option 2: False. The claim that experts recommend 12–24 months’ net pay as the universal emergency fund is not aligned with mainstream personal finance guidance. Most recommendations emphasize ensuring you can cover essential expenses for several months, not a full year or more of take-home pay, since income stability, spending patterns, and job markets vary widely. While there are circumstances where a larger cushion is prudent (e.g., self-employment, uncertain employment prospects, or high fixed costs), the standard rule of thumb is significantly shorter than one to two years, which supports evaluating and adjusting the fund size based on personal risk factors.
In sum, the statement in Option 1 conflicts with common guidelines that favor a multi-month, rather than multi-year, cushion, and Option 2 aligns with the typical recommended range for an emergency fund under most scenarios.

Introduction to Personal Finance CP - 2 - Beatty - Preparatory Academy - 1st Semester - 2025/2026 Final Exam- Requires Respondus LockDown Browser

Experts recommend setting aside one to two years' net pay in an emergency fund.

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