Everything You Need To Know About Emergency Funds

Great post! It’s always surprising how many people have never thought of having an emergency fund.

My mum always told me I should have at least 6 months worth of expenses readily accessible for emergencies, and that’s what I try to stick to. It has been tricky recently as we have bought a home, a car and a dog all within the space of 2 months, so the amount we’d need in an emergency has rocketed!

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We do have an emergency fund, although it’s closer to the $1,000 recommendation, than 4-6 months of expenses. We keep it in a money market fund, so it earns a tiny amount of interest. Have such a small buffer – especially since we also have a lot of debt – is stressful to me. In a stroke of very good luck, an elderly family member has decided to give away some of his money, and I’ll be receiving several thousand dollars shortly. While I’m temped to use it to pay off debt, it’s all going into our emergency fund. We will allow ourselves to use some of it if we have a large tax bill, but the rest we’d plan to leave there.

We keep a large emergency fund because I am self-employed and we own rental properties. Having multiples furnaces and air conditioners is a good reason to have extra money on hand! I like to have more than I need whenever possible.

I’ve kept an emergency fund of a few thousand in cash savings for as long as I can remember. Was very thankful to have had it last year when the central heating system packed in just at the British winters started. Because of the quick and easy access to cash I was able to have a plumber out the next day to do all the required repairs and get the maintenance up to a level that it hopefully won’t need looking at again for a decade.

I have about 6 months worth of expenses in my savings account for my EF. I’m doing my darnedest not to look at it as I buy houses (“it’s an extra bit of money I can use for downpayment…”) since I’d still like a cushion for all the house-related emergency costs that will be coming up.

I believe a large emergency fund is essential to someone who is self-employed. That paycheck is usually less guaranteed than us in corporate world, I said usually… :). The large emergency fund is a great way to protect yourself from lumpy income, or a downturn in your business. But for individuals who have a pretty consistent income via payroll wages, I think most can get away with a much smaller emergency fund as long as they can access some of that money via after-tax accounts for example.

I don’t have an emergency fund. My income comes from so many different places, it’s virtually impossible they even dry up (in a relatively short period of time) to the point where I can only cover my living expenses. Income diversification is my emergency fund, I guess.

Note: I’m still on my parents insurance plan which has an extremely low deductible. I have two vehicles so if one gets totaled, I’m fine while insurance sorts it out.

We’re a single income family with a house and car, so I definitely want us to be prepared for emergencies. We set aside money in our budget each month for home and car repairs. For our emergency fund, we keep a big cushion in our chequing account, then we invest the rest where we could access the money in a couple days (our line of credit/credit cards could bridge the gap during those couple of days). We’re comfortable with this setup for now. It gives us piece of mind to know that we could deal with life’s normal emergencies.

CD’s have no more risk than a savings account and are backed by the FDIC. The risk is loosing your interest accrued, but varies from place to place. Since the FDIC insures an amount, and not the number accounts, I break my accounts into the min (usually $1k to $2.5k) so if I do need the money, I only take the hit on what I need. I also use a revolving CD ladder of $50k and have $10k or so in a savings account. This year I want to start a muni bond ladder, but will probably start at 1 year terms and then each year add another bond [ year 2 I will take out 1 year and 2 year].

Having an emergency fund is SO important. I’ve heard (more the once) the argument that you don’t need an emergency fund because “that’s what insurance is for”. We have excellence insurance all the way around (home, car, medical, dental) but there are still those expenses that pop up that are not covered by insurance or warranties.

Yes, I have an emergency fund separate from my normal checking and savings account in my bank. I just seriously started saving for it in the Fall of 2013. I always had a small one, but it got used up and then some when my old car needed a lot of repairs. I’m currently working up to 6 months worth of expenses. I’m over a third of my way to my goal that I hope to hit by the end of next year. Having a designated E-Fund definitely helps me sleep better at night.

Right now mine only has just over $500 in it, but I’m adding to it each month. I don’t want to stop at $1k even though I have debt to pay off. I want to keep building until I hit the 3-6 months of expenses mark. Slow and steady wins the race right?

Emergency funds are a must, especially if you’re in debt. Not having one can allow you to sink into deeper debt when the unexpected pops up. I’ve had to use my EF a lot for my car unfortunately since I drive so much. Since I am aggressively paying down debt, I’d be comfortable with at least 2 months of expenses in my EF. $1000 is not enough for me and could be gone in a flash. Anything can happen.

Wow, Michelle, you have a great emergency fund! I’m still working on mine, I hope I will have a solid emergency fund too!

My husband and I have two Emergency Fund. My EF has $40,000 while my husband has a lot more. Not sure when I want to stop! We have no debt but our mortgage that will be paid off within the year.

I follow the Dave Ramsey steps and I have a $1000 emergency fund right now. I’ve had to dip into it recently because the snow and ice here in Buffalo, NY has done a number on my exhaust system on my car. But if I use it, I stop paying extra towards my loans (2 more left) and I put the money right back into the savings. When I lost my last job the emergency fund helped out even though I didn’t have to use it. But it was there just incase and I felt safe. Once my loans are paid off, one more year, I will work on having a 6 month emergency fund. Not many people I know have this. Usually, they’ll charge an emergency on credit. Thankfully, I have the funds available so I won’t get into any trouble with credit cards