On the Money

Private banking: the value of personal liquidity by Dick Hensley, chief executive officer of Waukesha-based InvestorsBank.

The current economic challenges have accelerated the pressures on personal financial stability. As a result, the risk associated with increased expenses, loss of employment or reduction in income can lead to increased reliance on personal resources.

It is typically advised to maintain personal reserves – some call it an emergency cash fund – that total about six months of expenses. Savings accounts and money market accounts are options for this, although as a nation, our historic savings rate has been poor. In the past, many people have depended on credit lines to fund unexpected expenses or to cover living expenses after a job loss. However, dependency on credit-driven solutions after an unexpected need arises may not be financially healthy, the terms may not be favorable or credit may not be available at the time the cash is required.

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