The 'prudent reserve' concept is not new. For years it has been used to describe a savings plan that is sufficient to cover several months of normal bills. If it costs you $1500 a month to pay all bills including food and medical, and you want a 3 month financial prudent reserve, then you need to save at least $4500 and keep it sacred. You don't invest it in 'sure things' or borrow from it for a new gizmo. You can use it for unexpected emergencies, like hospital bills if you have an accident.
This money should be kept somewhere safe and DIFFICULT for you to pilfer. I suggest a credit union account with NO CHECKING or DEBIT card. If you need it, you will need to manually transfer the funds. Many credit unions will let you start such an account with $25, and will not eat it up with fees. DO NOT GO INTO DEBT to start your reserve. DO NOT borrow the money, or put necessities on a credit card so you can put $$ in a low-interest account.
There are other, non-financial ways to build or add to your prudent reserve. These may include simple tangible items with long shelf-life, such as non-perishable canned goods or a few extra toothbrushes if a multi-pack is on clearance. Justifying a new TV or washing machine is not prudent reserve business -- focus on the funds or tangibles that you would need to maintain your health and safety and keep a roof over your head, preferably with a little heat in winter.
You can start small. Something like one month rent and utility bills, or to put by two more weeks of food, is a good first goal. If money is already tight, review the Resources page to see if there are any ideas there that can help with building your prudent reserve.
As your preparedness increases, you may want to ensure that you have some cash in a safe place that is easy to access in case your bank suffers from the same emergency and is CLOSED. If the electricity is out over a wide area, cash may be the only way to buy things -- if you can find a willing seller.
