Emergency Fund: How Much is Enough?

How much do I need in my emergency fund? I’ll admit, I’ve been all over the place on that question since I began my cash lifestyle years ago. I don’t have a credit card to fall back on, should anything happen. Whatever cash I have in the bank is all I have to get me through if something goes wrong.

I’m not alone in my uncertainty about my emergency fund. If you look around the personal finance community, you’ll find recommendations ranging from $1,000, to 3-6 months expenses, to 1 year’s worth of expenses, to keeping nothing liquid (depending on credit cards and/or investments that can be used in an emergency). It’s a hotly debated topic.

I’ll be honest, my short-term financial focus tends to be all over the place. I know what I want long-term. But life is always changing, and I find myself trying to adjust to whatever comes my way. Often times when I make big adjustments, I’ll also adjust how much money is in my emergency fund.

What are some of the things that have caused me to adjust the amount in my emergency fund?

A big factor has been how much cash I have in general. When I had larger amounts of money in my savings account set aside for other priorities, like home improvement, I felt more secure in having a smaller emergency fund. Having $1,000 in an emergency fund isn’t a big worry when you have several thousand more in your savings account that you could potential pull from, if needed. But, as that money has been spent down, I feel less secure about having enough money if something happens.

Another factor has been how “secure” my life feels. When the boyfriend lost his job, our situation immediately became less secure. Both of us took on more expenses. Right now, he doesn’t have a long-term job, so there’s no guarantee that we’ll have 2 paychecks coming in every week. It was also a vivid reminder that no one’s job is guaranteed. With everything that was going on, ramping up the emergency fund seemed like a good idea.

Six months ago I felt pretty good about having a $1,000 emergency fund. Now? I’m working on building that fund up to $3,000. I’m half-way there. Will it be enough? I don’t know. Emergency funds are for emergencies. For the unexpected things that come up in life. I’m hoping my emergency fund will turn out to be more peace of mind, and I won’t have to find out if it’s enough.

I’m sure the amount I feel that I need to have in an emergency fund will continue to fluctuate over the months/years. Someday I’d love to be one of those people who is debt free, and has 3-6 months worth of expenses sitting in an emergency fund, just in case. I know there are a lot of people who build up to this amount to start, and then work on slaying their debt. I tend to lean towards keeping the emergency fund a little smaller until the debt is gone. After all, the more debt you can get rid of, the less money you’ll need to cover your monthly expenses if you lose your job.

How do you feel about an emergency fund? Do you lean towards keeping more money set aside as a cushion? Or would you rather put that money to work in other ways?

– Cindy W.


  1. We tend to keep anywhere between 3 months and one year’s worth of expenses in liquid savings. We usually let it grow for several months at a time before investing some of it in retirement, HSA, etc. I like to keep our savings on the bigger side because we have rental properties and things pop up.

    1. Once we’re on better footing, I definitely think we’ll do something similar. I already tend to put a lot of my “extra” money into savings, letting it grow a little before I utilize it for debt payoff, or work on the house. It adds some temporary cushion to the emergency fund, which is always nice!

  2. Just imagine what could happen. Imagine every *really important* electric device in your household broke down in the same week. Imagine a sudden major repair at your car. Imagine some major health issue (Heaven forbid!!!) that would keep you from working for half a year or has some expensive cure. Put enough into your EF (or into some easy access account) to cover those up. You are right: most probably nothing will happen at all – it is just for your peace of mind, and that is so much worthwhile! Especially with all the other problems in your life – an EF is one worry less!

    1. I think it’s important, especially in the early stages of personal finances, to consider all of your resources. For example, I have great health insurance through work, along with short-term and long-term disability plans. Life insurance. A company I used to work for would hire me back in a second if I lost my job (even though I hope to never work there again). My Dad’s a mechanic and owns his own shop, and has loaner cars available if I’m in a pinch. If my whole world crumbled at once, my little emergency fund wouldn’t go too far. But, with limited funds, I have to balance my priorities. So, having enough to cover all my deductibles, or most repairs, etc. will at least get me through most things. Slaying my debt will free up some funds, so later down the road I can put more into my emergency fund.

  3. I’m all for a well-funded emergency fund. Since both me and my husband are self-employed, it gives us major peace of mind to know that we have a back up in case anything were to happen.

    1. Self-employment definitely makes a big emergency fund a necessity; Even when business is great, you can’t always control how/when clients will pay. I’ve made bumping up my emergency fund into my #1 priority; Even if it’s only $3,000 I’ll feel more comfortable knowing it’s there.

  4. I’ve been flip-flopping on this question all year — first I wondered if I even needed one (vs paying off debt), since I have a ton of available credit. Like, $30,000 or $40,000 worth. Then I was convinced that it would be a good idea to have cash on hand, so I set a goal of $6000 (aka six months of bare-bones expenses). But now I’m sort of feeling like it would be a good idea to have $10,000 (or, honestly, $20,000), just in case I need to buy a new car, or support myself through a career transition, so I re-set the goal to $10K even though it will take me about 18 months to save that much up assuming I stay in my current job and keep my retirement contributions set at their current level, AND assuming I don’t have the kind of emergency that causes me to spend down that cash 🙂

    I don’t know, man. Life seems unstable and uncertain, and I feel like I should have cash. Lots of cash.

    1. I think it’s going to be an ongoing consideration for me. Right now I really want to get rid of the student loan, and sell the house. Hopefully I can knock those out somewhat quickly. Then I’ll probably come back and reconsider how much I want in the emergency fund. More is always better!

  5. We’re aiming for a specific number. I tend not to think of things in terms of months, because when we’ve faced financial issues we’ve automatically pared back our spending. When I got furloughed for almost a month last year we cut our expenses down by 75%. So the X number of dollars we want to save would last us two months at our current rate of expenses, I think we could stretch it to 4-5 if we were careful.

    1. I’m the same way; For now at least, I like aiming for a certain number. There’s always some wiggle room in my budget. And, if I lost my job, I’d like to think I’d find something, even temporary, to bring in some sort of income. Maybe once I have my debt paid off it will be different. But for now, I think of my emergency fund more as covering deductibles, or filling in gaps if a job loss meant we couldn’t cover all of our expenses.

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