How much is in your emergency fund?

[frugalnacho]

I used to have a super stable job and target $10k in the account just in case.  Then my company got sold, then I found a new job at another company, then I got laid off, then I found a new job.  It's been a wild ride, and now that we are back on our feet* I need to decide how much to keep in our savings account.

On the one hand I make a decent income, so I should be able to save money for expenses as they arise just by stopping my investments.  I should be able to divert $40-50k/yr if I have a bunch of crazy expenses come up with short notice. 

So this emergency fund is not really just to pay for a water heater, or a car repair, or even a new roof, as I should be able to easily cash flow any of those issues.  It's more of an "oh shit" fund in case I get fired or get laid off again and can't immediately find another job.  I have about $60k in my taxable brokerage account, but I'd like to avoid relying on that for living expenses, especially since I think there is a high likelihood that an event that leads to me being unemployed and unable to find work will coincide with a drop in the stock market making me sell those shares at possibly the worst time.  It's nice to have it as a back up to my savings account though.

I currently have $23k in a savings account, and we spend roughly $35k/yr, although I'm sure we could tighten our belt if the situation warranted it.

Am I being too conservative keeping that much sitting in a savings account when I have another $60k in taxable, and another $10k or so we can pull from roth in an emergency?  Should I decrease the savings account and just dump the extra into the taxable account?  I don't want to be selling the taxable at the worst possible time, but at some point the taxable account is so large I know I should realistically not be worrying about that.  Even if I did have to start selling the taxable account at the worst possible time, I won't be selling it all at once.

*We were never off our feet, I just got super stressed out during the entire period.  Worked for 14 months at stable job after company sold, then took higher paying job for another 7 months before getting laid off, then landed my current job immediately after being laid off.  Only 6 business days off total for both job transitions.

[jps]

At your spending, $23K is just under 8 months of expenses. If you think you're being too conservative, you probably are. If you feel good about whatever is in there, it's probably the right amount.

I know folks around here differ on whether or not you should have a cash emergency fund at all, but we have one at $15K and it feels great. Obviously, we could use that money for investment gains, but everything is a trade-off, and this opportunity cost is one that I'm happy to pay since it reinforces DW's and my peace of mind and makes us feel rich since we can pay cash for anything that comes up without even having to access the internet.

[innkeeper77]

We have a target of $10k for now, but have operated for years an order of magnitude less. I don't think your $23k is unreasonable, but you could consider putting some extra in bonds in your taxable account instead of such a large savings account buffer, but the returns aren't drastically different than a good savings account, and more volatile.

I would personally figure out access to cheap credit and then determine your actual needs. Do you own property that you can lock open a HELOC with? If so, you might be able to get away with a lot less money languishing in a savings account, with only a small amount of interest to pay if ever temporarily needed. If credit cards are your backup, this is obviously not the same.

Lastly, what interest rate do you have on your savings right now? If it's sub 2% I would strongly recommend getting a good online savings account (we use Ally)

[Kris]

Too conservative? Maybe.

But one thing I don't often see people talking about when they discuss the "emergency fund" thing is the significant psychological impact of money on our well-being, which you've alluded to in your OP.

To me, I look at an emergency fund as not only providing a financial cushion in case of emergency, but also peace of mind. You're "buying" lack of stress, in a way. And that has effects on your physical health, your relationship with your spouse, family and friends, probably on any impulses to "self-medicate" with booze, food, or impulse buys... which of course cost money in and of themselves...

The MMM lifestyle (or my approximation of it), to me, has always been about having enough money so that money is not a source of worry. Having an emergency fund that makes sense to you is an important part of that. Too conservative or not.

That said... I do hope your emergency fund is in a high-interest savings account! :D

ETA: innkeeper77 beat me to the interest rate part. Definitely you should be getting more than 2%.

[Lan Mandragoran]

8-10k.

Would prefer to have 15k as our monthly spend is quite high (for here) just due to having 2 15 year mortgages one of those being a rental.

[Buffaloski Boris]

An emergency fund for 3-6 months is probably sufficient. Seems to me that your emergency fund has an emergency fund (taxable accounts), which in turn has another emergency fund (Roth account).

Ultimately, the person who has to sleep at night is you. And if it takes a large amount sitting Uninvested in a savings account, then do it.  If I woke up in your shoes I’d thin the emergency fund and redeploy more than 3-6 months spending. Probably no more than 3 months as there are other funds you can reach if need be.

The need for an emergency fund seems to decrease somewhat with increased wealth as you have options that someone with minimal net worth doesn’t.

[letsdoit]

i had 30 k in bank for a while and i would have gained alot if it had been in the market

now we have a little over 1000 in the bank .  i'm more comfy with 3k or 4k  in the bank

but we have enough in easy to cash in brokerage accts, to live for 2 years 

[charis]

Would you actually need any emergency funds if laid off? Does your partner have income? Can you collect unemployment? How close are you to FI? Do you have a HELOC or credit as a fall back or cushion? We have a modest EF, but with 2 incomes, unemployment insurance and a heloc (and credit card to buy 1-2 months time), the risk is also relatively modest. We also live well below our income to mitigate fall out from job loss.

I'm also considering refinancing our mortgage to stretch 15 yrs left to 30 for bigger safety net (lower payments) and free up more cash flow to investments. I dont want to pay closing costs, but we may have access to a new tax deferred account soon, so I'm tempted...

[DadJokes]

I currently have $8,600 in a money market and $25k worth of Roth contributions that I can access if needed. I've been gradually moving money from the savings/money market to my Roth IRA. I might as well get some decent gains on it. We do have stable government jobs, though.

It may also vary depending on whether you are single income or if you have a spouse that also has an income. If so, what are the chances that both of you lose your job? Can you live off of one of the incomes? It's certainly one of my goals to live off the lower of our household's incomes, which is my wife's. In that case, there is no reason whatsoever to be conservative with the emergency fund.

[frugalnacho]

We own our house but have a bit of a unique situation preventing us from borrowing against it.  When my wife purchased it the county was trying to incentivize home ownership, so she got 2 mortgages, one regular mortgage for half the price ($46k), and one through the county for half the price ($46k).  The mortgage through the county requires no payments, and accumulates no interest.  We just have to pay it back when we: either sell the house, refinance, or borrow against the house.  As long as we continue to live in it as our primary residence we don't have to repay it. We've paid off the other mortgage so we own it (less $46k), but this situation prevents us from ever taking a mortgage or HELOC or anything related to this house.  The benefits of a free $46k far outweigh the alternatives, so it's a non starter - we are just going to sit tight until we decide to relocate long distance. 

The savings account is earning 2.1%. 

Yes the savings account is definitely about peace of mind.  I was a bit freaked out when I found out I was getting laid off.  I ended up being employed for an additional 2 months after I was notified, and got $5k severance, and an additional 60 pays of pay, plus my PTO paid out (≈5 weeks), so in the end I made a ton of money and transitioned into another job.  But what if I didn't get that severance, or additional 60 days pay, or my 5 weeks PTO, or the additional 2 months of easy office time in which I received paychecks and could job hunt on company time?  Had I been straight up fired on that day instead of being given 2 months notice (and getting all the severance, and pay, etc) I would be about $45k poorer today.  We would have survived still, but that's a scary thought.  I want to be prepared just in case my boss comes in and tells me to pack up my stuff.  I think it's unlikely, but it will suck if it does happen so I should be prepared.

[EngagedToFIRE]

Here ya go:  https://www.youtube.com/watch?v=tFpJrqp0l_4

[Parizade]

Right now I have $25K which would cover basic living expenses for at least a year. This is more than I usually keep though, I am about to FIRE and wanted a safety net for the transition.

[RWD]

Current credit card balance sum + minimum balance(s) + mortgage payment + car payment + upper bound utilities payment = ~$7k on average in checking accounts. Everything else gets swept to our savings account which I periodically (once per quarter) invest in our taxable brokerage account.

[frugalnacho]

An emergency fund for 3-6 months is probably sufficient. Seems to me that your emergency fund has an emergency fund (taxable accounts), which in turn has another emergency fund (Roth account).

Ultimately, the person who has to sleep at night is you. And if it takes a large amount sitting Uninvested in a savings account, then do it.  If I woke up in your shoes I’d thin the emergency fund and redeploy more than 3-6 months spending. Probably no more than 3 months as there are other funds you can reach if need be.

The need for an emergency fund seems to decrease somewhat with increased wealth as you have options that someone with minimal net worth doesn’t.

I also have several $100k in 401k/IRA accounts that would be an emergency emergency emergency fund.  I definitely don't want to tap into those.  I don't want to tap into any of them honestly, I just want to keep the accumulation train rolling.  The $60k in taxable could be used, but the thought of depleting that sucks after I've built it up so much.  I built it up for FIRE, not to spend during unemployment before FIRE, but I guess I gotta do what I gotta do.

Would you actually need any emergency funds if laid off? Does your partner have income? Can you collect unemployment? How close are you to FI? Do you have a HELOC or credit as a fall back or cushion? We have a modest EF, but with 2 incomes, unemployment insurance and a heloc (and credit card to buy 1-2 months time), the risk is also relatively modest. We also live well below our income to mitigate fall out from job loss.

I'm also considering refinancing our mortgage to stretch 15 yrs left to 30 for bigger safety net (lower payments) and free up more cash flow to investments. I dont want to pay closing costs, but we may have access to a new tax deferred account soon, so I'm tempted...

My wife is a stay at home mom, and will likely never work again.

5-7 years from FIRE by my estimate, will depend on several factors.

No HELOC or mortgage, see my previous post.

I could presumably collect unemployment in the event I lost this job.  Not exactly sure how that works, never done it before.  I don't think I would get very much though.

[Fire2029]

I keep 50k in ally savings.

Single income, two kids, in a sales industry that could be at risk during an economic downturn when I wouldn't want to sell other investments. With some belt tightening we could get our spend down to 60k a year. New water heater, emergency car repairs, etc don't come out of this. They just come out of monthly cash flow and we invest less that month.

[FIREstache]

I don't have an emergency fund.

First credit cards.

I've got about 12 grand of working cash left in checking after just paying my property tax.  That would be my first place for tapping emergency cash.

Then I've got 10's of thousands in a Vanguard Prime Money market fund in my taxable account which I can tap penalty free pretty quickly.

After that, it I really needed a huge wad of cash, I would tap into my taxable account investments.

[rantk81]

About 60K in Ally savings.

[RWD]

I don't have an emergency fund.

First credit cards.

I've got about 12 grand of working cash left in checking after just paying my property tax.  That would be my first place for tapping emergency cash.

Then I've got 10's of thousands in a Vanguard Prime Money market fund in my taxable account which I can tap penalty free pretty quickly.

After that, it I really needed a huge wad of cash, I would tap into my taxable account investments.

Sounds like your emergency fund is about $12k.

[frugalnacho]

I don't have an emergency fund.

First credit cards.

I've got about 12 grand of working cash left in checking after just paying my property tax.  That would be my first place for tapping emergency cash.

Then I've got 10's of thousands in a Vanguard Prime Money market fund in my taxable account which I can tap penalty free pretty quickly.

After that, it I really needed a huge wad of cash, I would tap into my taxable account investments.

Sounds like your emergency fund is about $12k.

Plus 10's of thousands in a MM fund.

[the_fixer]

My spend is about 57k

We have 2 incomes and live off less than one I have never had an emergency fund and have invested everything. We have delt with major medical issues, job loss while floating 2 houses and have been fine.

My plan was cut everything not necessary to life, live off other income, if both were gone use unemployment, then sell stuff, then credit cards, then Roth. We got as far as cutting everything possible one time.

This last year the wife took a job with less stability and that is harder to replace so I decided to start an emergency fund putting 10k in this year, (space above investment order) and have put it in 12 month CD's $1000 each month.

I plan to do this next year as well for a total of $20k.

In a few years I will fire but the wife plans to work a few more years so that will provide a nice buffer just in case.

After we fire that money will be probably be used for a down payment on a rental property or as a buffer for adjusting our income for the ACA while continuing our Roth ladder.

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[use2betrix]

I have about $75k right now between my savings and checking. I typically like to have closer to $50k (about 10 months of semi-lean living expenses.) With how high the market is, I’m fine with keeping my emergency fund high. I’m currently putting my monthly savings of about $13k-$15k/mo direction into the market between my 401k and taxable investments.

I work as a contractor so my work is volatile. I currently have probably the most stable job of my career, with about 2 years left in my contract, but I still like to have a big emergency FU fund if I need it.

I also don’t mind dumping some extra in the market when it dips. I dumped a big check of my emergency fund on December 24th 2018, which turned out to be a good idea.

[tryingtosave]

I keep a whole year of living expenses in my emergency fund. Can stretch that even longer if i reduce the expenses. I know i am missing out of the earning potential of having that in the market but i want to know that if anything were to happen. I am good for at least a year. I had lost my job twice the past few years and having this emergency fund allows me to sleep at night and spend time to look for a job that i like. Luckily i never had to use this money and hopefully i never will have to.

[charis]

My spend is about 57k

We have 2 incomes and live off less than one I have never had an emergency fund and have invested everything. We have delt with major medical issues, job loss while floating 2 houses and have been fine.

My plan was cut everything not necessary to life, live off other income, if both were gone use unemployment, then sell stuff, then credit cards, then Roth. We got as far as cutting everything possible one time.

This last year the wife took a job with less stability and that is harder to replace so I decided to start an emergency fund putting 10k in this year, (space above investment order) and have put it in 12 month CD's $1000 each month.

I plan to do this next year as well for a total of $20k.

In a few years I will fire but the wife plans to work a few more years so that will provide a nice buffer just in case.

After we fire that money will be probably be used for a down payment on a rental property or as a buffer for adjusting our income for the ACA while continuing our Roth ladder.

Sent from my Pixel 2 XL using Tapatalk

You should never wait to lose both incomes before applying for unemployment. In general, you cannot collect back unemployment pay. Anyone who is laid off should file immediately. If you don't end up needing it, great, but if you do, you will regret leaving that money on the table if you are eligible.

[HBFIRE]

right now mine is at about 9 months living expenses, I keep it all in a high yield checking @ 3.3%. 

[HBFIRE]

I also don’t mind dumping some extra in the market when it dips. I dumped a big check of my emergency fund on December 24th 2018, which turned out to be a good idea.

I do the same, keep a very healthy cash reserve (for several reasons) and invest it if a significant opportunity presents itself. 12/24 was one of those nice opportunities.

[Bloop Bloop]

I don't have an emergency fund, though I have savings and offset funds which I could withdraw at short notice if needed.

I can't think of anything - touch wood - that would actually require emergency spending. Australia has a comprehensive health insurance publicly funded and I have private health insurance on top of that. I have landlord's insurance, home and car insurance, and income protection insurance. About the worst thing that has happened to me is that I got an unexpectedly high insurance renewal.

[robartsd]

Single Income, No Kids (wife is homemaker with lots of volunteer work and minor side hustle)

Regular savings: 3 months (I'm uncomfortable when this drops below 2 months after unexpected expenses)
Roth contributions (invested): 3 months
Leave credits: 2 months
Total: 8 months, ~6 months after adjusting for lost benefits

Getting myself fired would be a problem (dig into Roth investments in just a few months); but we should have at least a year to find alternative income before the Roth in the case of layoff, disability, or death after considering insurance and layoff notice period.

[the_fixer]

Sorry if I was not clear that is what we would do.

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[dblaace]

Currently 15k, probably 6 mo. expenses. It was about 30k but I used half for a new car.

I'm working on getting it back to 30k, though. I also use it as kind of an escrow account for my property tax and insurance. ~5k

[calimom]

I keep about $25K in an emergency fund. A few years ago I had a major septic repair, new roofing, a blown transmission and a kid's broken arm with some co-pays involved. Oh, and a special assessment from the neighborhood association for road work. What was able to go on credit cards did, but the cash transfer to pay it off meant I wasn't incurring debt, which I am entirely adverse to. So since then, I have been religious about keeping a large cash buffer.

And OP, while this is not on-topic, does your wife NEVER plan to work in a paying job again? With not high investments and a spouse whose job is not secure, is that the best plan for your family?

[MilesTeg]

Enough for a ~1 month's expenses.

For "water heater/car broke" emergencies that's why we have credit cards/etc. Instant access, 50k+ limit.

For "lost job/similar" emergencies we would pull funds from investment account (not a limited access/retirement account). ~1 week access, years of expenses there. (I suppose one could call this our real "emergency fund" but the reality is it's just the part of the 'stash' that is not in retirement accounts, real estate, etc.)

For the latter, while it's true an emergency could hit us at a bad time in the market that would make accessing those accounts more painful, it's also true that the compounding gains made on that money would counter-act those losses (and in the the long run exceed them).

[HBFIRE]

it's also true that the compounding gains made on that money would counter-act those losses (and in the the long run exceed them).

This completely depends on when an emergency occurs and the time horizon involved.  Short term (less than 20 years) - and emergencies don't tend to have a convenient time schedule- , this may or may not be the case.  I think most on these boards probably have credit cards for emergencies, but having cash reserves provide some of us with a sort of safety net and ability to sleep at night if the market takes a nasty turn.  I used to be completely against the idea of having a cash reserve, but after hitting FI I completely changed my mind -- now it's more about reducing overall portfolio risk and protecting capital.  Of course, at that point one could just increase the bond allocation and achieve almost the same end.

[FIREstache]

I don't have an emergency fund.

First credit cards.

I've got about 12 grand of working cash left in checking after just paying my property tax.  That would be my first place for tapping emergency cash.

Then I've got 10's of thousands in a Vanguard Prime Money market fund in my taxable account which I can tap penalty free pretty quickly.

After that, it I really needed a huge wad of cash, I would tap into my taxable account investments.

Sounds like your emergency fund is about $12k.

Plus 10's of thousands in a MM fund.

Yeah, plenty of resources that should cover any emergency I can think of, but I don't actually consider those to be emergency funds.

My average yearly spend is near $19K/yr right now.  If I lost my job in the next 10 months before I FIRE, which I can't imagine happening, I would just go ahead and FIRE and live off the stash.

[achvfi]

I have been grappling with same question for a while. My take is that 6 months to an year in bare-bone expenses is good amount, considering you still have various emergency funds (Taxable, roth, HELOC, IRAs) for emergency fund.

I understand there are other options beside having emergency fund but when you have real emergency you shouldn't be burdening yourself about taking additional loan or selling investments at a bad time. When shit hits the fan and you don't have cover, its going to hit you in the face.

[SwordGuy]

We keep from $10k to $150k in cash, depending upon how recently we sold a property and whether we have immediate plans for purchasing or renovating a rental.

Our rental property business keeps about $10k in it for serious repairs.

When we were in normal working couple mode (instead of FIRED/non-FIRED real estate investors) we kept more like $10k in cash.

We had various investments we could pull from at need but that was a pretty rare thing.  We've always kept our expenses pretty low compared to our incomes so we could cash flow most thing.  Once we paid off everything we owed back in 2010 our expenses were so low we could get by on one income and still save money.

We have mandatory withdrawals from my wife's 401K and my (inherited) IRA.  That money can be used to restore our cash position (instead of transfering it to taxable investments) if our other non-SS passive income streams dry up.

For example, I'm expecting $0 in farm income until next spring instead of about $20,000 because of the China trade war issues.   That would give us a $20,000 shortfall in our budgeted income unless we pull from stocks.   The mandatory withddrawals cover that shortfall and a bit.   

4% SWR would supply almost 3 times that shortfall so it doesn't bother me to pull a bit out once and a while instead of reinvesting it in taxable accounts.

We have a mortgage note we own that we expect to get refinanced (and thus provide us with payment in full).  It will put our cash position on the high end.   Given uncertainty that's not so awful.   If housing prices drop we can pick up some rentals much more cheaply.   If they don't drop we can be more selective and just get fewer for now.

If stocks drop big time we can just put most of that cash into stocks and enjoy the ride upwards when the recession is over.  (And then buy some rentals before the prices go back up!)


Being FIRED with a good safety buffer means that we don't really have to worry all that much.    There are plenty of ways to cover our needs without running out of money.

[ministashy]

About 9K total (6 months living expenses) in my emergency fund, but only 2K or so is in savings, the rest is invested.  My justification for this is a) I have CCs and can divert 401K/savings transfers from my paycheck to pay for emergency expenses (and am in fact doing that right now) 2) I work in a field where getting a new position elsewhere, albeit at a lower rung on the ladder, should be relatively easy, if I ever lost my current position (assuming I don't do anything stupid that would torpedo future background checks) and 3) I'm not a high earner, and I need every one of my money-soldiers earning as much as they can right now, not stuck in a savings account and not even keeping up with inflation.

[AnnaGrowsAMustache]

$1000 in the bank for things that break, basically.
Then 4 months living costs in accessible investment account.
And then the main savings in investment
And finally, retirement savings that cant be touched until I'm 65 - this is the employer matched scheme in my country.

[dignam]

I'm not even exactly sure.  I generally have a few thousand in checking, and can get $$$ from brokerage account within a couple days if needed.  So....like $20k or so?  Credit cards to bridge the gap from when I pull money out of brokerage to when it appears in checking if needed.  Then, pay off immediately. 

[big_owl]

Ours varies between $60-$100k depending on what we're spending money on.  I feel most comfortable with it around $75k.  We're actually making a decent chunk of interest off it these days though it sounds like that might soon change again.

[I'm a red panda]

I don't have an "emergency fund".

But in an emergency I could access pretty much any of my money, in CDs, MM accounts, and taxable and tax deferred investments. There would be penalties for some of it, depends what the emergency is if it's worth it. It's just my stash.

[frugalnacho]

I keep about $25K in an emergency fund. A few years ago I had a major septic repair, new roofing, a blown transmission and a kid's broken arm with some co-pays involved. Oh, and a special assessment from the neighborhood association for road work. What was able to go on credit cards did, but the cash transfer to pay it off meant I wasn't incurring debt, which I am entirely adverse to. So since then, I have been religious about keeping a large cash buffer.

And OP, while this is not on-topic, does your wife NEVER plan to work in a paying job again? With not high investments and a spouse whose job is not secure, is that the best plan for your family?

No never.  I don't plan on working more than another 5-7 years.  How high is high enough investments? Our house is paid off, we keep about $3-5k in checking, have $23k in savings account, $60k in taxable, $11k in roth, and another $310k invested.  Total net worth around $530k.  My earning potential is much higher than hers too, so it wouldn't help much even if she did get a job.  Even if we somehow got someone to watch the baby for free, and she worked full time she probably won't make much more than $30k/yr, which would be taxed heavily too.  Instead of being able to save $40-50k/yr we might be able to save $60-70k/yr, which would help us reach FIRE a little faster, but I don't think it's worth the stress and extra work it would we'd have to do.  If you factor day care into the equation I doubt we would even be able to break even with her working, but we both sure would be a lot more stressed.

I wouldn't say my job is not secure, but it's more that shit happens and I don't want to get too complacent.  I thought my last job was secure...until the whole plant got shut down.  The current place I am at has been in business for many decades before I was even born, and does a lot of contract work with the government...but still there could be other factors I'm not privy to and this whole place could shut down as well.  Or I could get fired.  I've known lots of people that spent 20+ years working a nice stable job, then BAM restructuring and redundancy and they were out of a job.  I turned down other job offers to take this job, so I'm pretty confident I could find another job if this one doesn't work out for me.

[boognish]

Feeling a little underfunded after reading these responses. Essentially, I have little or no cash - I keep just enough to cover expenses, and everything else is invested.

Running through my potential emergencies, I still believe its more rational for me to not hold much cash, but I am a little jealous of folks sitting on a Scrooge McDuck pile o cash (I'm not gonna follow suit, but I 100% get the appeal)

[frugalnacho]

Feeling a little underfunded after reading these responses. Essentially, I have little or no cash - I keep just enough to cover expenses, and everything else is invested.

Running through my potential emergencies, I still believe its more rational for me to not hold much cash, but I am a little jealous of folks sitting on a Scrooge McDuck pile o cash (I'm not gonna follow suit, but I 100% get the appeal)

I've always been close to the same mindset as MMM.  Just keep enough for bills, and invest everything else.  Cash flow any unexpected expenses by temporarily stopping investments.

I still believe that is likely the best way, I'm just a bit freaked out from the recent lay off and unsure how much I should hold in savings vs how much I should put in taxable.

[Laserjet3051]

For me, the definition of emergency is unemplyment, which may be long term. All of these other "emergencies" discussed above and elsewhere (e.g. water heater, new transmission, etc) do not qualify as an emergency in my definition. I can handle all of those. But long term UE, as 2008 showed me can be a real wealth killer. It can also decimate the hubris so prominently toted around by many. I am under no  illusion that even with a terminal degree, and decades of relevant experience, that I couldnt be shut out of the job market (e.g. a good job) for a protracted period of time.

My EF serves to buffer UE. I am also the primary, (self employed) breadwinner in a VHCOL area supporting a family of 4, that includes 2 kids. Income split between myself and spouse is about 8:1, so relying on spouse to pay bills if I were long term UE would be a problem. Spouse is also self-emplyed. All said, our risk of income  disruption is very high and neither of us would qualify for unemployment benefits (being self employed). Thus, we would ideally have 1 year of bare bones expenses in our EF (50K-60K). We are working towards this goal, but only currently have about half. Every situation is completely unique.

[Ynari]

I freaked out a few weeks ago when I looked at our "Emergency Fund" category in YNAB. It's only $4,300! HALF of our monthly expenditures! Why does YNAB say my money is 72 days old when I only have 15 days worth of $$???

I thought about it and realized I wasn't counting OODLES of emergency cash waiting for me if I need it.

• The aforementioned EF bucket of $4,300
• The fact we're always pre-budgeted by 15-30 days, so at least $4300
• Designated budgets for irregular items that are planned for a specific expense or can be diverted (i.e. a built up car maintenance or our gifting/moving budgets) Total deferred-spend bucket: $10,000
• Roth IRA contributions: $5000 (granted, these are invested, so last resort)

So that's an $18,600 cash buffer with $5,000 of easily accessible investments. Nominally, that's 2-3 months of expenses (our 72 days). PLUS, if we lost our jobs, we'd have easy ways to stretch it, such as:

• Stop overpaying student loans. $2,000 of our monthly budget is paid-ahead-by-years student loans
• Stop contributing to deferred spending budgets - about $1,750
• Get more mustachian (cut gym, alcohol,etc)
• Use credit card buffer (last resort)

So, as opposed to our "nominal" 2-3 month EF, we have a 6+ month "real" runway. I know there are scenarios that could drain this, but just as we talk about managing risks regarding FI never being fully 100% predictable, I am OK with our plan not covering 100% of possible events. If the shit really hit the fan in the next few years in such a way that it prevents both of us from working long-term or even attaining any other sort of financial income... well, that'd have to be big enough to really throw our life out of whack, so the best investment to prepare for that is in family and community supports and good insurance.

[2sk22]

My wife, who is a lot more risk averse than me, simply would not have peace of mind unless we have several years worth of living expenses readily accessible as reserve. To be fair though, the company she works for went through several rounds of layoffs in the past ten years - which probably accounts for her outlook. I suspect that everyone's own experiences inform their views.

[HPstache]

4 Months Bare-Bones budget for us which is about $12K total.

[MilesTeg]

For me, the definition of emergency is unemplyment, which may be long term. All of these other "emergencies" discussed above and elsewhere (e.g. water heater, new transmission, etc) do not qualify as an emergency in my definition. I can handle all of those. But long term UE, as 2008 showed me can be a real wealth killer. It can also decimate the hubris so prominently toted around by many. I am under no  illusion that even with a terminal degree, and decades of relevant experience, that I couldnt be shut out of the job market (e.g. a good job) for a protracted period of time.

My EF serves to buffer UE. I am also the primary, (self employed) breadwinner in a VHCOL area supporting a family of 4, that includes 2 kids. Income split between myself and spouse is about 8:1, so relying on spouse to pay bills if I were long term UE would be a problem. Spouse is also self-emplyed. All said, our risk of income  disruption is very high and neither of us would qualify for unemployment benefits (being self employed). Thus, we would ideally have 1 year of bare bones expenses in our EF (50K-60K). We are working towards this goal, but only currently have about half. Every situation is completely unique.

To me, the definition of financial emergency isn't about what is going on (UE water heater, etc) but rather about what the time table I need to come up with the funds is. Something like long term UE happens over, well, a long time, so having money in 'hard to access' places like investments is fine because waiting a few days or weeks is not a problem for a long term financial stress like unemployment.

(This doesn't mean it's not a financial problem mind you).

However, if I have something that needs done /today/ then I need access to enough funds /today/ to get that done.

[use2betrix]

I keep about $25K in an emergency fund. A few years ago I had a major septic repair, new roofing, a blown transmission and a kid's broken arm with some co-pays involved. Oh, and a special assessment from the neighborhood association for road work. What was able to go on credit cards did, but the cash transfer to pay it off meant I wasn't incurring debt, which I am entirely adverse to. So since then, I have been religious about keeping a large cash buffer.

And OP, while this is not on-topic, does your wife NEVER plan to work in a paying job again? With not high investments and a spouse whose job is not secure, is that the best plan for your family?

I’m not the OP, but my wife and I have been together over 7 years and she has worked very little. Maybe a cumulative of 6-8 months. I am a contractor so my job is not secure, and we just move state to state for various projects. My income is very high so it’s not necessary.

Her earning potential, if she worked full time, would be around 1/10 to 1/8 of mine.. We find more value in her handling all the errands and household duties while I work, so my time spent not working we can do things we enjoy instead of laundry, cooking, cleaning, grocery shopping, etc.

We don’t have any children, but hope to eventually. When this happens, the benefit of already having a stay at home wife will come in even more handy when we don’t need extensive child care and such.

[Laserjet3051]

For me, the definition of emergency is unemplyment, which may be long term. All of these other "emergencies" discussed above and elsewhere (e.g. water heater, new transmission, etc) do not qualify as an emergency in my definition. I can handle all of those. But long term UE, as 2008 showed me can be a real wealth killer. It can also decimate the hubris so prominently toted around by many. I am under no  illusion that even with a terminal degree, and decades of relevant experience, that I couldnt be shut out of the job market (e.g. a good job) for a protracted period of time.

My EF serves to buffer UE. I am also the primary, (self employed) breadwinner in a VHCOL area supporting a family of 4, that includes 2 kids. Income split between myself and spouse is about 8:1, so relying on spouse to pay bills if I were long term UE would be a problem. Spouse is also self-emplyed. All said, our risk of income  disruption is very high and neither of us would qualify for unemployment benefits (being self employed). Thus, we would ideally have 1 year of bare bones expenses in our EF (50K-60K). We are working towards this goal, but only currently have about half. Every situation is completely unique.

To me, the definition of financial emergency isn't about what is going on (UE water heater, etc) but rather about what the time table I need to come up with the funds is. Something like long term UE happens over, well, a long time, so having money in 'hard to access' places like investments is fine because waiting a few days or weeks is not a problem for a long term financial stress like unemployment.

(This doesn't mean it's not a financial problem mind you).

However, if I have something that needs done /today/ then I need access to enough funds /today/ to get that done.

Good point about the timing component of needing cash. Recently, we had to come up with $50,000 at 1:30 in the morning to  post bail for an immediate family member. Obviously, no financial institution is open at that time. But the sooner that large sum of money could make it to the court, the less hours/days the beloved family member had to sit in a dangerous and confining jail cell.