[Jake]

I’m pretty young so I know my opinion is based on the fact that I haven’t lived through enough emergencies yet.

I know the consensus is 3-6 months of living expenses is the standard emergency fund.

I have a hard time just having 18 grand doing nothing when I have a 7.5 percent interest mortgage.

I know I probably should refinance, but I was thinking of waiting a few more months.

I have a max out of pocket on my family insurance of around 7.2k. my insurance is very good through my union.

Is it okay just to have a 10k emergency fund?

My mortgage is 1400 and I live in central Indiana.

We bring in around 100k or so.

I’m trying to think of a situation where I would need several months of living expenses.

I’m very job secure unless I get really injured, which I have the proper insurance for.

[Paige]

Here are some scenarios where you would need more than $10k: you get fired from your job and can’t find another for 6 months, you are injured and have medical expenses AND can’t work, your house needs a major repair/maintenance item like roof, HVAC, new flooring; you get divorced, you have to fully fund a funeral for someone, someone sues you, your car gets totaled, etc.

[Samantha]

You never know what can happen. Completely healthy people have become disabled overnight.

Insurance doesnt cover lossed pay.

With homeownership, house emergencies can come up.

My husband and I are healthy and have great jobs, but those are just a few of the things we account for as reasoning to have 6 months of living expenses in our E-Fund.

[Marisa]

This year, I had to buy a new car then got hit by a tornado and hurricane 5 weeks apart, requiring new electrical weatherhead, roof damage, new fencing, tree cutting, after I had surgery and had to buy a new refrigerator and washing machine.

All this year!!!!!! I can’t use insurance for any of it because I’ll just get my rate doubled.

[Zach]

A few years ago I decided to put my “emergency fund” into VOO so it wasn’t just sitting around doing nothing.

I know that isn’t recommended but I did it anyway.

I didn’t want that much money sitting around losing buying power over the years.

It’s worked out well so far.

After awhile it will have grown enough to where I’ll still be ahead even in a large market down turn.

I’d rather do that than to have to continuously add too it as things get more expensive over time.

[Natasha]

Our son is in the trades. His emergency fund is six months of his salary.

It’s in a high yield savings account.

It is common on our area for tradesmen in the union to have lay offs.

Sometimes they are short and other times long.

Another perspective, right when I earned my school administrator degree and was looking for a job with four minors at home, I was diagnosed with an incurable cancer.

In my state teachers do not earn social security.

That includes no social security disability.

We are now a family of six making it on my husband’s teaching salary.

I wish I had known to purchase disability insurance.

We likely will never FIRE but I am striving to launch my kids and give them tools so they can fire.

Term life disability insurance and a minimum of four months for a stable and safe job but otherwise six months emergency fund in a high yield is my suggestion.

[Tristan]

Well, what happens if you have a major medical issue 12/26? That’s 7.2k for 5 days of care, then starts over 1/1 and now you are adding another 7.2.

And that doesn’t include if you have loss of wages or any other bills you need to cover.

Just one example of how things could come in to play.

[Kevin]

I keep $10,000 in cash that I can get to immediately if I need to. The rest is in my sinking funds and investment accounts that are also reasonably easy to get to if I really needed it.

24 to 48 hr.

I’m pretty close to retirement so loosing the job wouldn’t be a big deal but when I was younger my job wasn’t that stable so I held a little more.

As you pile up more assets the amount of the emergency fund that you need quick access to will go down and the amount you can invest will go up.

[Mark]

3 to 6 months is standard. depending on your situation can be much higher or much lower.

also remember its called an “emergency” for a reason.

unplanned and unexpected.

ppl with substantial assets dont have conventional EFs.

they may use their brokerage account or just a CC.

look at ur own personal situation do whats best for you

[Jason]

There are general guidelines, and personal necessities.
The point of an emergency fund is to 1) eliminate the stress that come from unexpected setbacks and 2) prevent inability to meet a small expense.

(e.g. a check engine light) turning into a major expense (blown engine).

Think about whether a) people in you situation commonly lose income – maybe due to recession, layoff, disagreement with the boss, etc and b) your steady-state spend rate and c).

how much variation in expenses you see month-to-month.

Maybe 3-6 months expenses in a high-yielding savings account is the right approach.

Maybe it’s more.

Maybe you’ve got generous family that would step up if you hit a rough patch and couldn’t / didn’t want to sell investments.

Use your judgment- and I wish you the best.

[Jess]

My emergency fund is in a HYSA so at least it is making 5% interest for me.

[Mark]

If you have enough equity in your home a Heloc might be the solution to avoid holding so much cash in an emer. fund.

[Ashley]

We’ve had a trifecta of bad fortune hit at once – to the point we had to dig into retirement funds to support us for a full year.

I’m thankful we had emergency funds plus a healthy retirement started and we were fine.

Look at worse case scenario and go from there. Could you move in with family and rent your home out? What can you cut?

Ultimately you are guessing.

[Carrie]

Life happens. Hospital expenses. Furnaces die. Cars get totaled. Jobs get eliminated.

There are many different reasons to have a safety net.

It’s better to borrow from yourself than pay someone else.

[Jon]

Depends on your house – is it new ? Will it need repairs ? Ac unit new can run 10-20k.

New roof can run the same.

Figure out what needs to be done to your home in the future and add it to your emergency fund

[David]

3 months is for young people with little responsibilities. You could probably even do 1.5 months plus a good line of a credit.

However, as you get older, more responsibilities, kids, spouse, etc, etc you need to be getting more toward that 6 months worth and it needs to be liquid.

Yes your mortgage is 7.5% but you can probably get 4.5% on your emergency fund in a savings account so you are only losing a potential 3% or so.

Think roof, hvac, transmission, medical bills, etc

[Jessica]

Some home ownership issues can be very costly, and if you don’t have the funds to cover it you will have to do a home improvement loan or throw it on credit cards.

We had to unexpectedly replace an HVAC system, had some electrical wiring problems in our house discovered that HAD to be fixed, had a major plumbing issue, and had a giant 50+y/o tree right next to our house die that wouldn’t have been safe to diy remove.

It was almost 50k this year in unplanned emergency expenses.

Granted that is unusually bad luck, but we were glad that we had a nice sized emergency fund built up so that only a portion of it needed to be a loan.

[Warren]

I have a taxable brokerage account that contains about 4 years of my living expenses.

I figure that’s just as liquid as sitting on a bunch of cash.

[Andrea]

If you’re having trouble saving money to increase your ef, then that’s a good indication you need a higher emergency fund.

That being said, do you have debt? Like credit cards, car, etc?

I’d focus first on paying off your debt to reduce your expenses.

This gives you a lot of breathing room should you have an actual emergency.

[Mike]

Keep it in a high yeild savings acct. Vanguard is 5.25% right now, I’m sure there are others that are comparable.

I love that you are eager to invest it, but you won’t understand until you have a emergency.

[Peter]

My emergency fund is on the small side… maybe 2 months. Worst case, I can take from brokerage, or use a credit card.

Never needed to so far.

I try to live well below my means, and don’t have many emergencies.

[Heather]

My emergency fund is earning 5.5% in a HYSA.
Personally we have a bit less than 3m in our emergency fund (like a bit more than 2 months), but we work for ourselves and it would be very unlikely for our income source to be cut off suddenly.

We also have several years worth of funds in a taxable brokerage that we could pull from if needed.

Everyone will have a slightly different risk tolerance.

[Renni]

Can your emergency fund offset your loan amount so that it feels like it’s working a bit more for you?

We have an offset account that we whack all extra savings in and it reduces the interest portion of our loan.

[Author]

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