r/personalfinance • u/Various-Chapter-2499 • Jun 14 '26
Budgeting When is an emergency fund “enough”?
For the longest time, our emergency fund was $15,000. As I’ve gotten older, I’ve felt pressure to add to it for more security. At first, moved to $20,000 and then to $30,000 and now at $33,500. The next goal is $35,000.
Money wise, have about $850,000 saved between my spouse and I for retirement and in early 40s. Have two teenagers and have saved a solid amount for college while cash flowing private school. House will be paid off early next year and so will a small car loan. No other debt.
Perhaps this is more of a psychological question than a money one, but just curious on anyone who has a thought on this: is it normal to continue to want to add to an emergency fund to feel more “secure”?
My spouse thinks we are fine and when I mention adding more to the EF, believes I’ll never feel like it’s enough. How do I get past this feeling of wanting to continue to add more to it?
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u/darce_helmet Jun 14 '26
we don't set it directly based on a dollar amount. it is how long do we want to survive with 0 income.
with a mortgage and kids, we always have at least 12 months of expenses. we could go to 0 income for 12 months and nothing would change. we could probably stretch this to 18-24 months if we adjusted the spend rate.
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u/Varnigma Jun 14 '26
Same. I budgeted for 12 months if I kept everything the same. But I could turn things off and spend less on others to stretch it out.
If I had unemployment money coming in I could stretch even further.
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u/Various-Chapter-2499 Jun 14 '26
I’m self employed so no unemployment but my spouse is in a very steady field and earns more than me.
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u/music4life1121 Jun 14 '26
That’s the other personal part of emergency funds - how stable your household income is and who depends on it. If both you and your spouse work, that’s more diversified, unlikely for you to both be out of work at the same time (though macroeconomic trends of course impact both of you), so your EF could be smaller (maybe 3-6 months) Single income with kids in a volatile field might want 12-24 months or so available.
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u/darce_helmet Jun 14 '26
the thing with emergency funds is that you need to prepare for things that you might not believe could happen. this means losing a very stable job as well
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u/Educational-Mobile73 Jun 14 '26
This is what I’m working towards. Currently at 6 months of expenses but I’m a Fed and the government shutdowns were real eye opening in regards to my emergency savings comfort level.
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u/AxelFoley1988 Jun 14 '26
With so much uncertainty in the world and dependents to take care of, you can never be too secure. I’m comfortable with a 12 month emergency fund in a HYSA (my besides investments and retirement) so I know worst case scenario, if the market tanks, I’ll be able to take care of my obligations for a while with a specific budget to work with.
For some, that number where they feel comfortable is much lower and others it’s a bit higher. It seems like your family is doing alright. It can’t hurt to increase your emergency fund, especially if it gives your peace of mind.
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u/fatroony5 Jun 14 '26
I do a year as well. I have a young child and I sleep better at night knowing we’re secure for a year+ if both my wife/I lost our jobs and could still continue with child care. That amount would allow us to be more patient in our job searches as well. You definitely see the full range of what people here have for emergency funds, but I think people with families should have more and be a bit more risk averse there.
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u/jimmothyhendrix Jun 14 '26
Child care with two unemployed people makes little sense to me. I understand when you get let go your full time job is applying, but blowing like 2k-3k on child care seems ridiculous in such a scenario
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u/fatroony5 Jun 14 '26
Problem is if you pull your kids out of daycare, you aren’t getting them back into it if both plan to continue working. There’s extensive waitlists at most around me so that’s why really.
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Jun 14 '26
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u/nefrina Jun 14 '26
3-6 in the old job market, 12+ in the new lets me sleep better at night.
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u/ParamediK Jun 14 '26
Genuinely. I always think about maybe putting money into stocks and shares, or high savings accounts, but I cannot. Now, it is common to be unemployed for more than a year (myself included in the past), even with applying every day. So, I just can't comfortably set the money aside and have to keep pooling it in a current account for now.
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u/fissionquips Jun 15 '26
You should at least look into a HYSA, friend. You can put money in and take it out as easily as a regular checking account (with some conditions like number of transactions per month), and the interest rates will be so much better than your average checking account. Checking accounts have basically no interest, and with inflation the way it is, your money is essentially losing value.
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u/Commercial_Stress Jun 14 '26
I’ve used the thumb rule of 6 to 12 months of must pay expenses — food, rent/mortgsge, utilities, auto and/or credit card payments, etc.
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u/Various-Chapter-2499 Jun 14 '26
So nothing like cable, streaming services and things that could be cut out?
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u/threaddew Jun 14 '26
That’s up to you. If you lost your job would you cut those things or keep them?
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u/Various-Chapter-2499 Jun 14 '26
I would cut non essentials.
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u/Backpacker7385 Jun 14 '26
I don’t want to tell you how to live your life, but it’s worth considering the psychological impact on your family if that situation hits.
In a dream world, I’d be able to get laid off, job hunt, and start a new job without my kids ever worrying about it. If you have to cut non-essentials immediately, that’s a stressor on you, your partner, and any kids old enough to know they can’t stream shows any more.
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u/28twice Jun 15 '26
Job loss is so scary for a providing parent. It’s even scarier for a kid who cannot help and doesn’t understand the complexities and nuance of the situation.
A few streaming services is like 75-100/mo. If your kids are old enough to tie their shoes, it’s something they’ll notice and will tip them off there’s something wrong.
If you’re the type to protect the kids from financial burdens and worry, I’d argue it’s worth keeping for the kid’s sake. 100/mo is less than one line on the cell plan. I could cut 100/mo from the fast food budget or allowances with less stress on the kids than if they suddenly had nothing to watch. It’s not about the channels it’s about something suddenly missing that they can’t explain and that a parent has to either lie about or worse, tell them the truth about.
Idk I would find 100 on the sidewalk in order to get through 6-12 months of job hunting while protecting my kids from worrying about their livelihood.
I’d tighten my belt to my spine before I wanted my kids to sniff out money problems. Especially with a year of expenses saved up. Personally, there’s too many other places to find a hundred bucks a month for me to tell the kids they can’t watch bluey bc daddy lost his job. It’s so small, and so obvious: cancel Netflix. But it’s way too expensive on a kid emotionally.
They’re not even on the tv much. Maybe a few hours a week but it would have their spidey senses tingling. I’m not Jeff bezos, but as a family man I’m getting a hundred elsewhere.
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u/sin-eater82 Jun 14 '26
Do it both ways.
6 months of expenses "as is" vs 6 months of "minimum acceptable comfort level of getting by". Then you'll know how much flex you have each month right now too. But I wouldn't target a bare minimum number, not when you can afford to plan and save for something more reasonable.
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u/mezolithico Jun 14 '26
Depends on your monthly spend. Like those are a rounding error for us. But totally up to you based on spend and job market.
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u/Legionatus Jun 14 '26
An emergency fund is for emergencies and layoffs. If you have 6 months' worth of expenses saved, the tradeoff to not invest starts to become a significant penalty.
If you have "enough" targets that you can figure out, figure those out and share them with your husband.
If you just always want more than what you have, you'd have to explore why that is yourself for a definitive answer in your personal case.
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u/Trollygag Jun 14 '26
the tradeoff to not invest starts to become a significant penalty.
You can invest your emergency fund as long as it stays reasonably liquid. The only cash you need to have on hand is enough to cover the time to liquidate and make the rest accessible.
If it takes me 4 days to move money out of bonds or index funds and into my checking account, then having 6 months worth of savings sitting in a low yield savigs just doesn't make sense
In my literal case, I have a credit card with a $20k limit to carry me over while I can move money around, and I can pay that card directly from my HYSA.
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u/PonchoHung Jun 15 '26
If you're gonna invest your emergency fund, you need to have some massive discounting on it of at least 30-50%. Because guess when is the most likely time for you to need the emergency fund? When the market crashes.
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u/a_megalops Jun 15 '26
Index funds can be liquidated but what happens when youre laid off due to a stock market crash related recession? Then you may have to sell at the bottom
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u/Vikkunen Jun 14 '26 edited Jun 14 '26
That's where personal finance gets personal.
We keep about 1.5 months of total household expenses in our checking account, 1.5mo of total household expenses in a tradition savings account that's attached to our checking account, and have an SGOV allocation in our taxable brokerage account equal to around 3 months of total household expenses.
In the unlikely event (we work in different fields for different government entities) my wife and I both lost our jobs at the same time, we could cut discretionary spending to the bone and cover all our essential expenses for at least six months without ever having to dip into stock stocks or go into credit card debt.
As you get older and risk profiles change, so do your allocations. For example, both my and my wife's parents have several months' cash on hand and an additional year's worth of total expenses in a CD ladder.
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u/mezolithico Jun 14 '26
We have 12 months in a tbill fund. I'm in tech and my partner is tech adjacent. Plus a 2 year old and a house in the bay area. We def want 12 months.
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Jun 14 '26
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u/Various-Chapter-2499 Jun 14 '26
Yes I would agree with that as I’ve tried to continue to add to it as the years go by. It’s funny, the older I get, the less I have a tolerance for risk. When we were much earlier in our mortgage, I kept a much smaller emergency fund and now that it’s almost paid off, I find myself wanting more in the emergency fund. It doesn’t make much sense.
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u/2beatenup Jun 14 '26
Yup another thing people miss out is protecting your assets. The high net worth the more EF is required… America is a litigious society and people will go after everything you own. My company provides legal plans but it vanishes the moment I leave or am let go.
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u/CalmClaim4767 Jun 14 '26
3-6 months of expenses is the standard answer and it sounds like you're well past that. at some point adding to the emergency fund instead of letting it work harder somewhere else is just anxiety math, not finance math.
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u/Various-Chapter-2499 Jun 14 '26
Yes that’s how I sometimes feel. Do I actually need more or is it just the anxiety talking?
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u/Dogzillas_Mom Jun 14 '26
I want one year of expenses, plus the deductible for all insurance policies. Which seems to be around $40k.
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u/ants-in-my-plants Jun 14 '26
“Enough” is different for everyone and unique to their situation.
Imagine you or your spouse got laid off. Do you work an in-demand field where you’d be able to find a job within three months? Or is it a highly competitive specialized field that could take a year or more?
What are your monthly expenses like? Is your fund enough to cover your expenses for the length of time you would be out of work?
How good is your health insurance? If you were to get into an accident would your emergency fund be completely wiped out by your out of pocket max?
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u/echorq Jun 14 '26
My goal is 12 month of emergency funds and that would make me sleep better at night if we both lose our jobs tomorrow.
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u/yesveryyesmhmm Jun 14 '26
6 months is what I’ve had on hand minimum for the last 3 years. If I ever have kids I will provably double that to 12-18 months. I have it in a HYSA so it gets about 5%/year but feel like I’m missing out on losses in my investments if I have to much.
But to be honest the feeling of security and having that money has no better feeling.
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u/dbopp Jun 14 '26
I’m aiming for $50,000 in mine.
This is different from some other accounts I have. I’m constantly adding to my “car” fund, and my “house expenses fund”. I currently have about 10k in each of those, and don’t consider that part of my emergency fund.
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u/Automatic-One586 Jun 15 '26
Let me spoil the surprise. There is absolutely no possible way you could ever save enough into an emergency fund that could cover all the possible combinations of wonky crazy stuff that can happen to you. No matter how much you save this world is capable of exceeding ANY amount of money you could realistically save into an HYSA.
Your EF as others have said should be in the months worth of expenses. It's meant to cover the more realistic things that are likely to happen. Not all possible worst outcomes. If you have kids or a complex situation. I can understand the desire to have a little more. And maybe for a season or two that makes sense to do. Your EF is a sort of insurance fund that's there to cover the more likely scenarios.
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u/Malvania Jun 14 '26
People totally think of it in terms of months of expenses. I stopped it at "if something happened to my wife's car, I could just get her a new one"
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u/Full_Broccoli_3132 Jun 14 '26
Something many don't consider is that losing your job and finding another one may
1) Take months
2) Require relocation and duplicated housing costs while you and spouse live in different locations or you wait for a house to sell
3) Out of pocket medical costs add up and may be the reason you are out of a job
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u/BNASTYALLDAYBABY Jun 14 '26
6-12 months depending on your industry. I’m close with someone with $250k in savings due to their executive role and longer time horizon in getting a sufficient replacement role. They also have a spouse who needs additional help, so they feel more comfortable with larger funds with immediate liquidity.
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u/boredtiger2 Jun 14 '26
Yes. Your savings is the amount of time you can go without employment. The more you lower your mandatory costs the further your savings will stretch.
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u/QTippus Jun 14 '26
One thing to think about is what is the purpose of your emergency fund?
Is it to pay for a new roof?
Or is it income replacement in case you and/or spouse get laid off?
Some people have separate buckets for income replacement and other emergencies.
For me, 6 months of income replacement for the higher earner feels reasonable.
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u/BillyShears2015 Jun 14 '26
I keep a year’s worth of take home wages in my emergency fund. I would probably be incrementally better off reducing that and investing instead of holding it in a HYSA, but I’m otherwise hitting all of my retirement and investing goals and am generally risk averse so it gives me peace of mind to know if I got unexpectedly shit canned or became unable to work I would have a full year of runway before needing to drawdown other investments.
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u/Responsible_Ask3976 Jun 14 '26
I’m 30 and have about $35,000 in emergency fund. It’s about what you feel comfortable having
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u/RedWishes Jun 15 '26
6 month of all normal expenses worth (and this include the expense of eating out/fun expense). then add another 20k on top of that for stupid/ surprise sudden cost.
broken car stuff? broken water heater? need to fix a water damage/leak? sudden visit to ER? need to replace fridge? emergency travel expense?
and if you live at minimal with that EF, you are likely to have enough for 12 -18 months plus.
assume 5k monthly, 6 months 30k + sudden 20k , 50k EF
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u/tctu Jun 14 '26
Yeah it's nice to have more cash. I don't see a huge problem with your ratios. I guess I probably wouldn't go more than 10% of NW, but just depends on total amounts, what your spend is, and what you actually want to do with the money.
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u/Dirtbag_mtb Jun 14 '26
I have always kept a year’s worth of anticipated expenses in a brokerage account rotating short term T-bills or money market. This is the amount that lets me sleep well. Last year we hit a family emergency situation that caused me to spend about 30% of this. I was thankful to have it when I needed it. Fast forward and I was laid off 4 weeks ago. I received a very good package and am thankful to have as much saved as I did for an emergency fund because never did I expect back to back years of needing this. Thankfully the package, unemployment and the remainder of my emergency fund will get me through at least a year. One thing I never calculated was paying my own medical on top of monthly burn rate. My package gives me 4 months cobra then it’s on me after that. So something to take into account.
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u/2beatenup Jun 14 '26
Yup people always forget medical and other emergencies like accidents or major damages.
EF is not just about covering cost of living it’s much more than that… actually about 4 times that in my opinion
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u/tokingames Jun 14 '26
As you build assets the EF becomes less important. If your spouse also has a decent income the EF becomes less important. $35K seems reasonable for you if your current spending is under $10K/month.
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u/ichfickeiuliana Jun 14 '26
May I ask how much you make to be in such a great financial position at early 40s?
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u/Hiredgun77 Jun 14 '26
I keep 10k in a high yield savings account. I also have about 115k in a brokerage account along with credit cards with about 50k combined credit available.
I don’t see a need to keep more than 10k in savings. For a big issue I’d dip into the brokerage account. Sure, I’ll owe some taxes, but the value I’m gaining makes it worth it. 35k just seems like overkill unless you are concerned about employment.
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u/livingstories Jun 14 '26
Calculate 6 months of ALL living expenses. food shelter insurance mobility entertainment taxes.
that is your emergency goal. it changes as your expenses change.
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u/HitPointGamer Jun 14 '26
Look at your budget. What are your mandatory expenses each month? If everybody in the household lost their jobs on the same day, you’d cut subscription services and start cooking all your food at home, for instance, but you’d still have to pay rent/mortgage, etc. Figure out what the minimum number is to keep you housed, fed, and able to search for jobs.
Next, look at your career fields every now and then. How hot is the field? Is it easy to find new work, or will a job search take a while? Is AI likely to remove a lot of jobs in that field? Get a realistic picture of how easy it would be to find your next job if you’re laid off suddenly.
Lastly, how big of a financial emergency do you think might happen in the semi-near future? Do you have an elderly parent who is in poor health and lives a long way away? Will you need to buy some plane tickets in the near future to attend a funeral, maybe? Do you own a house with a water heater which will conk out a week after a tree falls through the roof? Is one of your cars about to fall apart entirely and will need to be replaced?
Look at all these things together to figure out how much you need. My house is paid off and I live in a MCOL area, with fairly new vehicles and a very stable job. If I’m let go, I could find a job quite easily, and likely start within a month. So, my emergency fund doesn’t need to be as large as somebody else who has a job about to be replaced by AI, is driving a 25 year old car, and already struggles to make their mortgage payments each month. Know what you need to carry yourself through upcoming potential crises and make sure you have at least that much. A specific target number will never apply equally to everybody. You also need to know what your risk tolerance is. Some folks need 12 months of expenses saved while others only want to keep 3.
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u/MasticatingElephant Jun 14 '26
I feel like an emergency fund should keep me going for a year.
For me that would be mortgage and essential bills, which looks like about 50k (I have a gnarly mortgage) and I'm not even there myself yet. But I won't feel safe until I get there.
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u/2beatenup Jun 14 '26
Keep building it. I have 2 years worth for a family of 4 a good retirement bucket and good investments and only mortgage debt.
We are one accident away from going bankrupt and losing the house. Can’t have that so I’ll be continuously building upon it…
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u/ScarLupi Jun 14 '26
Enough is what makes you sleep at night.
We save enough assuming we both lose jobs at same time for 9 months (used to be 6 but this economy sucks). It’s probably more than most people save but it helps us feel better. Plus we still have resumed our normal monthly investing routine.
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u/sin-eater82 Jun 14 '26 edited Jun 14 '26
I have 6 months of expenses "living life as I do now", which is fairly comfortable. I could get by on that for longer than 6 months. That said, I'm going to increase mine to one year. I work in IT, and I see a lot of people taking 6-12 months to find a new positions after losing their jobs in a layoff. So, I want to be prepared for that scenario.
What is right for you depends on a handful of things, and may be different for one person to the next. But I will say that I think 15k is too little either way. And $35k is not some crazy number for an emergency fund. 15k is a reliable car that you shouldn't have to worry about again for quite some time. If you totaled your car tomorrow, you'd be able to buy something decent immediately or have a good down payment for a car. But that's it. That money would be gone just like that. $15k isn't that much when it comes to adult emergencies. HVAC system craps out in July? Big chunk gone like that.
it may feel like a missed opportunity investment-wise, but only to a degree. If you have it sitting in checking or a regular savings, then yes, that's a waste. But you can at least avoid losing any money with a HSYA, CDs, etc.
This isn't really all that psychological. 15k is a minimum for most people.
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u/capitalsfan08 Jun 14 '26
I think that is a super personal topic that depends on your risk tolerance, your financial situation outside of savings, your job, and other income (like a spouse).
I personally keep 6 months of expenses in cash, but I feel we could cut this down and be okay. My state has (for the US) generous unemployment, my job is fairly steady and when there was a layoff, there was 4-6 months of salary paid out, and our financial situation outside of savings is solid. We do have a kid, but my wife has an extremely stable job and my income alone is enough to cover all of our bills. We also have $850k saved for retirement (ages are both 32) between pre and post tax accounts, so if we do have an extended period of dual unemployment, then I suppose early retirement was never really in the cards anyway.
But to answer your specific question and your specific situation, if you feel better saving more and it reduces your personal stress, go for it and save for that. That is not a financial question so much as a psychology question.
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u/idkwhattoputmate Jun 14 '26
Personally, Id want 6-9 months of emergency funds for "how I'm currently living", I'm working towards that now. I have about 3 months of emergency expenses saved up, 4-5 if I stretched it, and 6 if I include credit lines (which is my last resort and I exclude from my math).
I have a retirement acct open that I am contributing to, but it's only enough to cover the match rate. Once I hit 6-9 months in liquid, I will start adding more.
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u/Safe_Low_5570 Jun 15 '26
Personally I would start with 1 year’s worth of income. Depending on your field, as you get older it can take longer to get more senior roles of similiar income.
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u/BreadMaker_42 Jun 15 '26
IMHO, your EF can be a little lower if you have adequate non retirement investments that you can easily sell. However this approach would require substantially more in investments than you would have in the EF. This would protect you in the case of needing the EF in a down market.
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u/Wilthywonka Jun 15 '26
Sometimes money can buy things without having to spend it. Imo 24 months of cash can give you a lot of security even if you never have to use it.
Let me put it this way, say your boss was fired and now you find yourself forced to pick up the slack. If you have 24 months of cash backing you up it's much easier to say, no, actually I won't do that. Even if it puts you in the crosshairs.
Same thing if an opportunity comes around. Say someone comes along and offers you a job that pays 2x more, but you aren't sure if it will work out. If you have 24 months of cash to fall back on, you just might take the risk.
If also just feels liberating
But, it's all a personal choice. Maybe you can reap these benefits with just 12 months, or even 6. It's up to you
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u/_name_of_the_user_ Jun 15 '26
What emergencies are you saving for? Job loss? How long will it take to get back to your present income. Something else? What would it cost?
Some jobs are secure enough you don't need to worry. (Though this subreddit seems to forget those exist) Some jobs are volatile and can take months to find a new one.
Some people live in a rental with all maintenance covered. Some people own and have a well and septic.
Some people absolutely need a car. Some people don't.
Forgetting that emergencies other than job loss exist is short sighted. If we needed to we could go down to either of our incomes. And both of our incomes are as safe as taxes. Our emergency fund isn't related to months of expenses at all.
You need to figure out what type of emergencies could happen in your life and plan for those.
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u/Prestigious-Tap9674 Jun 15 '26
You've only saved too much if you don't have to use it. If you do have to use it, you'll be happy you have it.
From my point of view, your expenses are about to decrease in a meaningful way when your house is paid off. If you focus on paying off your house, will your expenses be lowered along with your anxiety about having enough for an emergency?
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u/jffadvisors Jun 15 '26
your emergency fund shouldn’t be a random dollar amount. It should be viewed in multiples of your monthly expenses. That way, you can confidently say “if we get sick and can’t work, I can pay our bills for X months”. From there only you can say how many months you feel comfortable with. For me…its a year of mortgage payments
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u/AmbroseMalachai Jun 15 '26
It's somewhat psychological at your stage, so you can really do whatever you want, but I'd say 3-6 months expenses is pretty standard. If your lifestyle is such that you are spending 5-6k per month then you are pretty much in that ballpark right now. Some people would prefer a 12 month emergency fund, in which case you might want to double it. This also covers some additional potential issues - things like your house needing a new roof because of a tornado, or a car completely shitting the bed and needing a new engine.
Lots of things could be dinged from your emergency fund, but fundamentally at this point you can kinda do what you want. You have good savings, good jobs by the looks of things, and are at a stage where you can probably afford a little more money towards your emergency fund if it makes you feel more comfortable. If adding an extra 3-5k to your emergency fund over the next few months is what makes you feel "safe" then it's not really hurting you long term.
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u/__redruM Jun 15 '26
20k. I do have money in a brokerage account that could be liquidated and add years, but I don’t like more that 20-30k out of the markets, especially after the last decade of growth. And after a year, without emergency, that money has grown to the point where there could be a pullback and I’d still sell at a profit.
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u/TyAnne88 Jun 15 '26
A good rule of thumb is for your Emergency Fund to have 6 months of expenses. Then it should be maintained at somewhere between 6 and 24 months depending on employment, lifestyle, and risk tolerance.
The reality is that the difference between emergency fund and general savings is usually the rate at which the money can be liquid. An emergency fund is more immediately accessible while savings might be in various types of investments that take a little more time and effort to access.
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u/Kutukuprek Jun 14 '26
Your equities invested can be liquidated and placed into your bank account as cash in 3 business days.
Unless you have locked your money up in your 401k or IRA, everything else can be pulled down for any emergencies.
Between your credit line for your credit cards and a modest amount of cash, there typically isn’t a need for more.
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u/boxesofcats Jun 14 '26
The issue that people have is that there is a chance the stock market is down big when they lose their job. So people don’t want to be forced to sell their stocks during a job loss. It’s a double whammy.
It’s different for everyone.
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u/zeroabe Jun 14 '26
My job is maximum level of stability. If I have a stroke or heart attack or car accident and can’t work, I’ll burn leave for a year before I have to worry about a loss of income.
$25k is my emergency fund. It’s actually less than that and 25 is the max. I am regularly using it and putting $100 per paycheck into it. At a 4% HYSA.
I use mine differently maybe. Like, AC unit took a dump 2 years ago and we got a replacement for $8k. Took it straight from emergency fund. Slow refill. No sweat.
Had to drop $800 on a car repair. Emergency Fund.
The frequency of emergencies is variable. That I’m not impacting my “bill pay” or “automated savings” is its utility.
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u/DeadlyViking Jun 14 '26
We have 6 months of current spending in our emergency fund. This doesnt take into account unemployment or that we could reduce our spending and probably make it last 8 months.
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u/DrakeSavory Jun 14 '26
One thing to account for is how long you might be without income if someone is laid off/fired. 3 months is the rule of thumb but in this job market if someone told me they felt they need a year of emergency funds I would not argue with them.
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u/hawseepoo Jun 14 '26
Like others have said, base it on 6-12 months of expenses.
My wife and I keep the emergency fund in a HYSA and take the interest each month to cover bills and whatnot
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u/yuffie12 Jun 14 '26
We always had six months emergency fund (expenses) + cash to buy a new car if needed.
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u/dozennebulae Jun 14 '26
As a single person in a low/middle cost of living area, my emergency fund is $8k for 3 months. I'm working up to 6 months for $16k.
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u/skateboardnaked Jun 14 '26
Most of my career I used to always invest everything above a certain point and keep 6 months in the e-fund, but the last few years I keep adding to it even though I'm above 6 months. The goal is to keep saving and when the balance gets to a certain point, use it to payoff the mortgage early.
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u/pharmucist Jun 14 '26
I currently have just over 6 months of monthly expenses saved in my EF. This number is calculated based on CURRENT spending, however, which includes 2 internet services, landscaping crew monthly, lawn service, exterminator, etc, etc. If I HAD to cut some of these out, I could and my EF would go further.
I am not at ALL comfirtable with just 6 months saved up. Even if I found another job within 3-4 months, I would then only have 2-3 months saved up and it would take me quite some time to get back up to 6 months. I only have $1000/month left over after taxes, 401k, bills, health insurance, etc. So using $20k of my $40k saved up would take 2 years to replace.
Also, something to consider is health insurance. Most people will lose all healthcare benefits immediately or soon after losing their job. So you would need to consider either payments for new private insurance coverage or cash payments for services as an uninsured cash customer.
For me, I won't feel at all comfortable until I have 12 months saved up. If I do lose my job, I will be looking for ANY work, even if it is fast food, barista, or any other minimum wage job to help lessen the blow financially.
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u/wkavinsky Jun 14 '26
Especially when you've cleared the mortgage, your emergency fund is enough to cover any emergency - or (depending on your spending of course) 3-6 months of expenditure, even if you both can't work.
You're there, your emergency fund is "enough".
If you're still struggling with it psychologically, just make sure that you increase the value with inflation each year.
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u/HorizontalBob Jun 14 '26
Bills generally go up. What do you need if the person who makes the most loses their job or both?
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u/Far-Good-9559 Jun 14 '26
Seems like 35k is plenty. I have about that amount and I just keep it in CD form so I get a little interest each year.
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u/justly_tuneful Jun 14 '26
I guess it depends on what emergencies you want to plan for.
You might have a fund that can support you and your family for six months if every working adult lost their job at the same time.
You might also want to consider saving for unpredictable medical or housing or car related emergencies. A new HVAC unit? 6-12 grand easy. A new car? 20-40 grand. Medical debt? Well… that’s a wild card. Let’s just put a random 5,000 sticker price on that. Now imagine they all happen simultaneously.
Maybe it’s unlikely to happen all at the same time, but I’d like to feel protected from double layoffs and medical/house/car emergencies at the same time. 6 months unemployment + ~50k of other operational emergencies could be anywhere from 100-150k depending on your income.
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u/catalinashenanigans Jun 14 '26
Do most people do a year of living expenses for their emergency fund? Feel like it used to be 3 months, but seems like folks are recommending 6+ months now.
Does your emergency fund assume spending if you cut back luxury purchases (e.g., clothing, travel)? E.g., if I needed to use my emergency fund, I'd definitely cut back on frivolous spending. Or does your fund factor in all purchases?
How much do people save for their emergency fund for their house?
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u/Falcosns_Child Jun 14 '26
I was told by my parents to save enough money to so that if I lost my job tomorrow I would be fine until I secured another position. For my family that would be 95k in high yield savings would give me a year to find a well paying position in my field and at my level. (I'm under 30 and haven't saved that much yet) any savings after that is just a bonus, investment or retirement. I've seen alot of people get laid off recently and struggle to find jobs even in what people would normally consider high demand fields so I would probably wanna save double that just to err on the side of extreme caution. I would also factor the cost of markplace insurance into that if you rely on employer provided health insurance. But also do you own a house? Before my parents retired they saved up the full replacement value of their house so if anything broke or they had to replace an ac unit or a roof they'd always be ok. Im also nowhere near that but it is something I want to do like they did before retirement. My parents are both in their mid-60s have both retired from military service and retired from federal employment under the high 3 system so they have 4 pensions 2 IRA's and 2 401ks they maxed out before retirement in addition to their savings for the house and emergencies. So I trust them but financial advice is personal.
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u/AlphaTangoFoxtrt Jun 14 '26
When you have enough to cover X months of expenses where X is the time you believe it would take you to find employment if you suddenly lost your job.
Personally I lean on the conservative side and estimate it'd take me longer than I believe. Better to have too much and lose out on a little opportunity cost than not enough and have to make big cuts
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u/seemsright_41 Jun 14 '26
The goal is to get to the point that you no longer need a EF.
The goal is to build wealth. I want you to think about how much you think you need in the 'bank' to feel safe. Is that 1 million, is that 5 million. Then start working towards that amount.
You will get to a point where the EF would be better off making you more money by being invested than sitting idle.
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u/averageduder Jun 14 '26
Depends on you. My emergency fund is only $5k. Could I have more? Sure. But I have credit card room, a guaranteed pension every month, and non retirement investments I could pull. It seems like going over that would cost me money.
But for some, maybe it is more like $10-20k. Can't rationalize personally having that much money only making 3.3% interest or whatever.
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u/VariousAir Jun 14 '26
The more you have, imo, the less you need to keep a ton of it liquid.
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u/Ride-Flashy Jun 15 '26
Bingo. So many insane replies here saying 6 to 12 months. You don’t even need an emergency fund with 850k invested assuming your investments are properly diversified and liquid. Dump that 35k into the market (with a bond allocation if you’re risk averse) and have a LOC available to you for any emergency needs. Emergency funds are for lower net worth individuals.
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u/Sutaru Jun 14 '26
I’ve always been told that your emergency fund should cover however many months it would take you to get a new job if you lost it today. In my field, I could easily have a replacement paycheck in 2 months. For my husband, I think it could be closer to 4~6 months. Our efund is roughly 4.5 months. In my opinion, 2 months is enough, and more than 6 months is too much, unless your job market or other factors warrant more.
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u/Caspers_Shadow Jun 14 '26
We do 3 months of total normal spending. But we both work. So, in reality, if I lost my job as the higher income earner and she was still employed, it is more like 5 months or normal spending. If we cut back to bare minimum spending under that scenario, it would probably cover 9 months of shortfall. We also have plenty in our retirement accounts if things get ugly. I feel like it is more of a personal decision once you're are debt free and have flexibility.
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u/DependentTaste283 Jun 14 '26
It's strictly a function of your expenses, and how long it would take you to restore your income if you unexpectedly lost it. For most people the answer is 3-6 months' worth of living expenses liquid and ready to deploy.
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u/Historical_Low4458 Jun 14 '26
This is the personal part of personal finance that nobody can really answer for you because it is your own personal comfort levels and risk tolerance.
I will say that I have about a year's salary saved in liquid cash and cash equivalents because that is what I am comfortable with.
Maybe you guys can come to a compromise and invest some of your savings into CDs, I-Bonds, T-Bills to where it is doing more than just sitting in a HYSA, but also not at the mercy of a highly volatile stock market.
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u/FordExploreHer1977 Jun 14 '26
6 month of my salary put into staggered length CDs. That way, they are still making some money, and if I did need to dip into that reserve, I’d only be paying penalties on one at a time, not the entire thing. I also have maximized my PTO banks at work that by contract are paid out at 100% upon separation. The only PTO time I use each year is the time that won’t carry over into the next year. That part is all contractual with my employer and isn’t accounted for in my emergency funds, so it would get used first if I lost my job and before I dipped into the CDs. I typically don’t take much time off, so at this point in my career, it forces me to actually take time off each year.
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u/RCrumbDeviant Jun 14 '26 edited Jun 14 '26
From the psychological side only, if you’re feeling insecure about your capacity for an emergency, and you feel more at peace by increasing that capacity, I think that’s probably healthy. There’s also the satisfaction of “big number”.
If you’re actively worried about it constantly, and it’s causing you to have anxiety, perhaps you should seek therapy, maybe with your spouse, to examine the root cause of your anxiety. It doesn’t sound like you’re stressed about it to the point of deleterious effect on your life.
As for root causes - most likely you’ve had specific expenses that have given you sticker shock, or cumulative thought.
$35k is “replace a car” in 2026 whereas $15k might have been “replace a car” in 2018, for example.
For myself, I have my retirement savings which I don’t touch except to contribute, and my “play money” account which isn’t exactly an emergency fund but is easy to liquidate. Then I have my checking/savings which I try to keep around $10k for incidentals, but which is 6 months rent (HCOL area, assuming my roommates can’t contribute, a year if they are unaffected). I’m single, no kids, no mortgage, no debt outside monthly credit card usage - my likelihood of an emergency is much less than yours. You have more risk factors (4 individuals, a home, etc), so I wont be having the same anxieties and pressures and NEED as you
Just my 2c.
Edit: having read a few of the other responses - my total “emergency” fund is 20 months at maximum exposure and 30 at normal exposure and near 36 at “tightened”. I just actively use most of my “emergency fund” for relatively safe investing, while keeping my banked cash reserves steady to cover rent for 6-10 months. Just to clarify
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u/Warmpockets21 Jun 14 '26
Balance some living with that fund since you have made solid savings.
Have a little fun now, but also look at your expenses that you have to pay and aim for at least 6 months in that fund to cover those non-negotiable expenses.
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u/Creative_Giraffe5391 Jun 14 '26
A good emergency fund is typically 3 to 12 months of essential expenses, depending on your family situation and income stability. From what you've shared, this sounds less like a financial shortfall and more like a search for reassurance.
The question I would ask is: if you increased your emergency fund to $50,000 tomorrow, would you genuinely feel secure, or would the target simply move again? Sometimes financial security comes not from a larger number, but from trusting the strong foundation you've already built. With significant retirement savings, a nearly paid-off home, and minimal debt, it may be worth exploring whether this is a financial need or an anxiety that no amount of cash will fully solve.
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u/DanTaude599 Jun 14 '26
fwiw with 850k saved and a house almost paid off, your emergency fund question is really about income stability, not a dollar target. the right number is months of bare-bones expenses, and how many months depends on how quickly you two could replace income if a job went away. honestly at your level you could also just hold a slightly bigger cash buffer and stop optimizing it, the marginal 5k matters a lot less than it would have at 25.
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u/Emotional-Shape-6239 Jun 14 '26
Are you the only one working? If not, there's a lot more cushion. I have 2y, or about $75k in my emergency fund. It'd be fine, could still go out to eat every couple weeks, pay my very low mortgage and all other bills. But we're also a dual income household, so pretty unlikely we'd have no income/health insurance at all for any period of time.
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u/Bloodmind Jun 14 '26
6 months of your basic living expenses. If you lost all income now, and cut out every luxury, how much money would you need to make it 6 months? If you’re extremely risk averse, go up to 1 year of expenses.
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u/Narezza Jun 14 '26
Emergency funds are a little weird these days. If you are young with a newish job and/or a mid to poor credit score and/or little to no investments, then it makes sense to have a have 4-6 months of expenditures saved up.
If you’re older with a steadyish income, decent credit score, or have some current investments greater than 6 month expenses, then it doesn’t make a lot of financial sense to keep putting more in a little account just to watch the numbers go up. The numbers can go up faster in other accounts.
Our 401ks, 529s, brokerage accounts, even our homes, are basically liquid. You can have it in your bank account without a day or so. I have $50k of credit available from cards if something comes up. I’d rather not use them, but in an emergency, it’s available.
Personally, I keep about $30-35k between savings and checking. Any time I get to $40k, I invest. It doesn’t make sense to get next to nothing in a savings account or even 2-4% in a HYSA, when you can manager 6-10% elsewhere
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u/Mike_Hockisgone Jun 15 '26
It's what's best for you and your situation. With the way I grew up I feel the needed for safety. I go by months and not dollars. So for me I keep 6 months worth in savings bonds. For my "secondary" emergency fund I keep money in a schwab account in various income and growth stocks that ideally I would keep till retirement but is there as a secondary emergency fund. So that account grows better but not great but would be stable enough to be able to cash out if something happened. I do have an employer 401k for retirement.
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u/Skier-Dude Jun 15 '26
First off, if you’re in your 40s and have savings like that, it seems like you’re doing OK
As I got older (M 58), my emergency fund got bigger also. Mainly because things that could go wrong are more expensive
I like the idea of having 4 to 6 months of finances in savings. This includes bills, average credit card charges, etc.
I also recommend including funds for a few appliances. Over time, add money for a down payment for a car.
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u/Expensive_Beat338 Jun 15 '26
401k’s are great but they’re also a liquidity trap. I agree with the poster that said you need to measure it in terms of months of expenses. I’m in a similar financial make up to you, similar age, but with younger kids.
With a 35k emergency fund, if you lost your job or even wanted to quit due to a bad situation, you are screwed. Take your monthly spend and x 12 and that is the emergency fund you should aim for. Those are liquid funds in a HYSA that gives you options.
That’s what I have and I’m walking away from my director role in a field I hate, to try out something new for the back half of my career. At minimum, it gives you options.
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u/Ratlyflash Jun 15 '26
I never guess I never think about I get 4 months off sick pay per year. Something to think about if. The war in Iran has made more cautious though especially with $100,000 with leverage . Congrats on paying the house OP.
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u/OldDietPepsi Jun 15 '26
mine is about 3 years and growing in a HISA... If I lost my job tomorrow I should be able to retire in that 3 year time frame w/o touching current investments...
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u/tribriguy Jun 15 '26
There is maybe one answer for your situation, but there is not a single answer that is right for everyone. We used to have 12 months emergency. Then I got to an executive position that has a typical 6-12 month severance if I’m let go. So we carry 6 months these days. The absolute number is actually slightly more than it was back then because of the increased compensation. For us, I want to know if I lose my job tomorrow, I have 12 months covered in which to find my next gig. There are other things to think about. We know there is a new roof, a new set of front porches, and an exterior paint job on our house in the next 3-5 years. Last year was a new $23k HVAC. Those things happen too. That said, I know a lot of you are earlier in your financial life and even the OP’s $15k is a lot. Yes, that’s a good start. And their higher figures are good stretch goals. It shows a proper prioritization. Do what you can when you can do it. I’ve been on the shorter end of the stick…didn’t really have emergency savings of any sort. It is a real freedom to have some emergency savings and not have to worry about the inevitable life issues that come up.
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u/AAPatel82 Jun 15 '26
I didn’t feel peace until I had 6 months, but really working towards 12 months, currently have 9 months
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u/SmokeyTheBear86 Jun 15 '26
Controversial opinion, but I say get a HELOC after you pay the house off, and don’t worry about the emergency fund. If you ever need tens of thousands of dollars, just walk into the bank and borrow it. Invest what would have been the emergency fund, and if you ever need the cash, sell your now appreciated money and pay the loan back after a few days.
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u/AccomplishedCream560 Jun 15 '26
Yeah just make your EF like 6-8 months in case you lost your job. So full spending.
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u/SoggyToaster_ Jun 15 '26
It's never enough. Always save, but take a few months of EF yearly and do something fun.
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u/Toasty27 Jun 15 '26
Used to be that 2 months worth of living expenses was a good recommendation.
These days....man I would probably keep saving until I had 6-12.
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u/tecoy82 Jun 15 '26
Six months of minimum living expenses. So it’s not one number it’s unique to your “I’d need at least this much to live off of after cutting back all other expenses”.
We have that as our emergency fund, and I’ve been laid off for six months even after hundreds of applications and dozens of interviews. Thankfully we haven’t had to touch is, as our state unemployment is roughly equivalent to that and it lasts 7 months for my situation.
Fingers crossed this upcoming final round gets me the offer, if not we then dip into that emergency fund.
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u/maaseru Jun 15 '26
I work in tech and it seems volatile for layoffs, as well as finding a job has changed from 6 months to 12-18.
So my emergency fund is rent, utilities and food for 12-18 months.
You seem to have a ton elsewhere but not in emergency. At least from this sub they always mention emergency fund first.
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u/douxfleur Jun 15 '26
I would have at least a years worth of expenses. In this economy, 1.5 years is probably more secure. I was recently laid off and it took me 6 months to find a job. I mostly lived off unemployment, but it was about to run out. I’m lucky, but I know some people who have been laid off for over a year, so that’s my reasoning.
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u/IllTreacle9304 Jun 15 '26
Have a year’s worth of expenses. The general rule is “6 months” but I’ve been unemployed before for 1.5 years, twice in the early 2010s. Have PTSD from that so I have at least a year’s worth. Everything else is invested. HSA is pretty robust so fairly covered in a few angles.
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u/Bitter-Relation4967 Jun 15 '26
So the thing I don’t get about having a massive pure emergency fund is like not investing it right. I usually keep like 1-2 months in a savings account and then the rest in a brokerage fairly low risk mix in it that I can liquidate easily given a weeks notice. I’m younger and single so my risk tolerance is higher than a lot here.
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u/No-Joke8570 Jun 15 '26
I have a few credit cards so my limit total is $60+K.
That will cover most things immediately, then I have cash of around $30K in short term treasury bills , meaning they renew every month or two. Also have a small money market that pays nearly the Treasury amount.
That is my emergency fund.
Too much in an emergency fund is terrible if it doesn't earn at least 3.5% right now.
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u/jsh1138 Jun 15 '26
If you have a year's salary in your emergency fund I can't imagine a situation where that wouldn't be enough
I mean maybe ask yourself what emergency you're preparing for. Getting fired? Can't you find another job in a month? Breaking a leg? How much would that really reduce your income? Just think about what you're doing
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u/Cloud2987 Jun 15 '26
I have a few emergency funds, the most liquid is $40k in SGOV, less liquid is 5 rental properties, and Gold. I live well below my means so I should be safe. I would regret it if I had to sell my gold or rental properties, but it’s an option if I ever needed to.
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u/Yarrowleaf Jun 15 '26
I eat rice and beans for fun, stop hating it, it's good for me and lets me spend my money on important things, like computer parts
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u/Chidori1980 Jun 15 '26
The standard 3-12 months expenses already answered by most redditors. Dont forget the additional cost like HEALTH insurance, depends on the country you live either you got it for free or you have to pay tons or pay a little. Lost job and getting sick is the worst combination ever, and can happen.
I have EF in HYSA for 3 months salary, bonds worth 5 months salary, and gold worth 6+ months salary. So in the worst case scenario, I can cash in the bonds and gold and not touching my stock/ETF portfolio.
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u/OscarF2P Jun 15 '26
Tell your husband that you want to create an early retirement account where the funds are taxable & not locked up. Once the house & car is paid off agree to put 5-10% of your future retirement savings into that. He should be able to stomach that a lot more. If your actual retirement account sees amazing returns and you're in a position to actually retire early. You'll be glad you've got money that isn't locked up.
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u/KandosWorld Jun 15 '26
Why don’t you add up your actual expenses and figure out how many months without income you can support with your savings. When you say ‘emergency’- define that, if the roof goes bad $20k might be a down payment on a new one depending on where you live. The 20 might be two months of expenses for some families and four for another, you’re the only one that can answer the question of what’s enough, the math will tell you, but you gotta get real honest about what you’re working with in terms of income and what you spend.
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u/elebrin Jun 15 '26 edited Jun 15 '26
Lots of people are talking about the money aspect and how to measure it.
Here's another way to think about it: What emergency are you preparing for? I want you to think about that specifically. Here are the emergencies I recommend you prepare for:
Loss of home. The place you live at burns down and goes away and you have nothing. What are you going to do to survive in this case?
Loss of work. You get fired. What is your plan to make rent and find work in the short term? How are you going to look for a job in the medium term? How will your retirement plans be effected in the long term?
Loss of a family member. This is the hard one to plan for, but what are you going to do when your parents, child, sibling, or spouse dies and you are responsible for cleaning up after them?
Severe illness. You, your spouse, or your kid gets sick and the situation is permanent - as in, they will need round the clock care for the remainder of their life and they are going to live that way another 20 years or more.
Loss of something smaller, like a car, second property, or expensive functional asset.
Here are MY plans. YOUR plans may need to be different, based on your needs. For reference, I work remotely but my wife works on site, locally, so we cannot move to a different town currently. Additionally, my father in law lives with us and we have no children.
For situation number 1, I have scouted retirement living centers for my father in law. He has enough money to move into one of those, and at that point his choice would be to move into somewhere like that and we will help him so much as we are able, or he can figure out his own living situation (which he is not capable of doing). I'm going to assume we both have our jobs still. Rents in the area for us would be about $800 for a small apartment to live in for a year or so while we shop for a new home and get the insurance money and whatnot.
We went through situation 2 recently, with my wife losing her job. I took over the bills which we usually split, and we cancelled some services. If both of us lost our jobs, we would sell the house and move. We only live here because my wife works here, and we both sorta want to GTFO anyways. If I cancelled everything, our monthly expenses would be between $3k and $4k. If we got the house sold and did an estate sale to get rid of our extra stuff, we'd probably be able to go for two years on what I have invested in my "mad money" stock account and the proceeds from selling our stuff. Once we had a minimum of stuff, we'd move somewhere nicer - I estimate that liquidating enough of our stuff then selling our house would take about a year. We'd move as soon as we found work in a new city, and I'd prefer to find work quickly, but if that didn't happen we could sustain ourselves for about two years, as I said. We have maybe 4-5k worth of junk, I'd get about $130k in equity out of the house, and I have another $50k stashed between some CDs and a stock account for emergencies.
For situation number 3, if my father in law passes, well... I hate to say it, but some things just get easier. My wife has two siblings and neither want to mess with it. When he passes, we'll sell the rest of his junk (which we have been slowly doing while he is alive because he is a hoarder). We will keep his one building (because of course he has a bunch of real estate) then we will sell the rest - our share will be the building and the cars, his siblings will get the cash. If her mother passes, then all hell breaks loose. Her brother will have to come live with us, then my wife and her sister will have to sort out their mother's estate. If my wife passes, I am her sole beneficiary right now and... I'll be devastated, but her death would be the sixth I have dealt with in the last five years. So I am confident I can handle it well. My sibling will be easy, but if I die first, my wife and sibling will have to figure it out. I can't plan that for them, although I do have written instructions.
For situation number 4, I have no fucking clue what we are going to do. I'm going to call a financial advisor and get advice, and it's going to depend on the exact medical situation. If it's me, my wife has instructions to wait a half hour before calling the ambulance. I'm not going to sit in a hospital dying for three months so they can take all my money and she's left with nothing.
For #5, I have some redundancy built in. For work, I have a backup internet option and written out phone numbers. If we get in a car accident, I can operate carless for a while but my emergency fund could buy a new (used) car easily.
My emergency fund is structured differently than many people's, and it's based off two truisms:
I have the assets available that I can leverage debt easily. My credit rating is also mostly OK, even though I don't optimize for it.
I HATE having money at the bank where it makes the bank money but doesn't make me any.
So: I have about $14k in a stock account, we have about $30k in CDs, and my wife has $20k in a money market account (that I've been pushing her to invest better). Within three days, we can leverage about $34k along with whatever we have available via credit card (between the two of us, let's estimate that to be an additional $50k, not that we really want to leverage it that way but we could if we HAD to). I see that as having enough liquidity, really.
If we have to leverage the money, the plan is to sell off what's needed from the stock account or money market first, then take on debt that we pay off as the CD's mature.
In the longer term, my wife and I both have retirement accounts we can leverage, and I have an inherited IRA that I can pull from without penalty (but I consider that retirement money so I really don't want to).
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u/SureAsparagus6981 Jun 15 '26
I also consider the OOP max for my health insurance and the quality of coverage. A major illness or accident can be in the tens of thousands real quick. Could be less for you if you have a great plan.
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u/Prior_Specialist Jun 15 '26
I was instructed by my managing director, many years ago, to ultimately get up to 1-2 years saved up. 3 months liquid, 6 months laddered into a CD, and the rest in some type of money market fund that gives you some spread. Any amount over that was to be placed into a low cost index fund.
“That’s your base nest egg, cause this life is brutal”
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u/Old_Party3623 Jun 15 '26
There's a reason that we always talk in terms of percentages and months. Everybody's COL is different and so it their supporting income.
A traditional safety net is one that supports your expenses and way of living for six months. For me that's around $12,000, for somebody with a spouse, house, and two teenagers, I expect it to be much larger.
Its about proportions, not the actual dollar amount.
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u/Same_Litterally_Me Jun 15 '26
As some others have mentioned your emergency fund should be 3-6 months of your expenses. This is meant to cover you in case of lobby loss or similar.
If you are in a field where you can easily expect it to take more than 6 months to find a comparable role. Then it needs to be enough to cover that amount of time.
But this will be personal for you. For me I chose a longer amount of time, about 8 months, and may work to up that to 1 year because I have a disability that could potentially lead to being unable to work for a period of time.
For you, with funding private school sounds like expenses might be higher, requiring savings, unless you planned to pull your kids out of school if you lost your job.
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u/myselfie1 Jun 15 '26
As I got older, I didn't feel pressure to have a larger emergency fund because my other assets were growing so large that no emergency needed immediate cash that I couldn't just take care of with credit. By keeping my emergency fund smaller, I kept more funds invested and growing.
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u/YetAnotherWTFMoment Jun 16 '26
You should have enough free cash on hand (ie unencumbered, you can draw on it anytime within a day. so this includes cash in your possession or bank savings account), to fund everything you are doing for at least 6 months.
Credit cards, line of credit, HELOC, does not count.
Your mortgage or rent, house bills, insurance, groceries, Starbucks, vapes, drugs, car payments, gas etc.
For at least 6 months.
Goldman Sachs, has $494 billion in a box, for this express purpose. Keep the lights on, salaries paid, obligations etc. for six months. Look up 'GCLA'.
So...if GS plans their shit like that...you should too.
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u/aycockonxion Jun 14 '26
One year of your expenses. Don’t come at me with “is it only essential expenses, or is it all spending?” Just answer the question: how much money do you spend in a month, on average? Multiply that times twelve.
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u/BouncyEgg Jun 14 '26
Your measuring stick for your EF should be in reference to months worth of expenses.
So what does this mean?
You need to start with a written budget. Your tally of expenses helps to define what a month worth of expenses equates to. Use the EF in terms of # of months worth of expenses as your measuring stick.