Financial experts outline rules for emergency savings and reserves

Financial experts suggest that maintaining an emergency fund is crucial during periods of high inflation and economic uncertainty. To protect against unplanned expenses such as medical costs, home repairs, or loss of income, it is recommended to keep a liquid reserve equivalent to two to three months of net salary.

Using Germany as a reference, where the savings rate was 11.5 percent in 2024, experts warn that keeping excessive cash in traditional bank accounts can be counterproductive if interest rates remain lower than inflation, as the real value of the money will decrease over time.

Furthermore, in Germany, the 100,000 euro mark is a significant threshold because bank deposits are covered by a deposit insurance system up to that amount per person, per bank, providing a safety net in the event of a bank failure.