June 13th, 2008 
NCN
Many popular personal finance ‘gurus’ suggest maintaining an emergency fund with enough money to cover 6 months worth of expenses. I thought it might be interesting to see what my readers thought about this advice. If you are reading this post in a feed-reader, you will need to click through in order to leave a comment and vote in the poll.
Now that you’ve voted, a few questions -
Question 1: Where do you keep you emergency fund? In a savings account, money market, checking account, or under the mattress?
Question 2: What about six months worth of expenses? Is this too much… or too little?
Question 3: Would you sacrifice a fully-funded emergency fund in order to fully-fund a Roth IRA (or other retirement / education savings account)?
Question 4: What is the smallest emergency fund with which you wold be comfortable?
Thank you for your participation. Your answers will help me write a future post. If you are a blogger and you write a post about this subject, click the contact button at the top of this page and let me know about it. I’ll be more than happy to link to your post.
Related Posts -
Building An Emergency Fund – Where Do I Keep It?
Reader Poll – Short Term Savings
Updating My Non-Retirement Savings Chart
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1. I kinda have 2 emergency funds. One is $1,000 for fairly minor stuff (emergency vet visit, etc.). The other is my unemployment fund. With my next paycheck, I will reach my goal of $10,000 which should cover me comfortably for 8 months (it includes estimated COBRA payments).
2. Ideally, especially in our current economic climate, I’d like to have a 12-month unemployment fund. Maybe I’m worried for nothing, but I’d rather oversave. I’m stopping at 8 months though because I have other financial goals I’d like to get started on. I can’t predict the future, there’s only so much I can self-insure.
3. No. I fully-fund my Roth IRA, however I do not fully fund my 401k (although 20% of my gross income goes into it). Having a fully-funded unemployment/emergency fund gives me a certain amount of security and freedom.
4. Three months would be the smallest I’d be comfortable with.
doh! forgot to mention that i keep my money in a high-yield online savings account
My goal right now is for a $10,000 emergency fund, but I’ve put it on hold since I met my mini goal of $1500. I keep my money in an HSBC high yield savings online (3.5% as of right now).
We keep our emergency fund in an online, high yield savings account. We don’t have 6 months of expenses saved up – more like 3 – but now that all of our vehicles (car, ex’s car and motorcycle) are paid off, we’re socking money into that account as fast as we can.
Our monthly expenses are $2,350 – but more than 25% of that is child support for my stepson. That’s our biggest monthly expense, and the only one we wouldn’t be able to put off paying for 30 days if we needed to. Other than that, my background in the service industry means that I may have to get a job waiting tables again – but I wouldn’t let myself go more than 30 days without being unemployed. It wouldn’t be my first choice – or even my 50th – but Waffle House and IHOP are always hiring.
We keep our emergency fund in a HSBC online savings account. Right now we have a baby emergency fund of $3k, and even if I was to loose my job we could cover all our minimun monthly expenses with my husband’s income. We have zero credit card debt, no car loans, but a big amount of student loans. We are focusing all our efforts to pay off one student loan at a time. After these student loans are all paid off we’ll focus our energy on saving up an emergency fund to cover 6 months of expenses.
Question 1: Where do you keep you emergency fund? In a savings account, money market, checking account, or under the mattress?
In a money market account at my credit union. When it is full, I move some to CDs.
Question 2: What about six months worth of expenses? Is this too much… or too little?
Ideally, 6 months would be great. We have outstanding job security so we could probably get by with less as our primary breadwinner can not lose his job without about a year’s advance notice.
Question 3: Would you sacrifice a fully-funded emergency fund in order to fully-fund a Roth IRA (or other retirement / education savings account)? We have chosen to fund IRAs and other retirement savings while maintaining a small emergency fund. It is not fully funded.
Question 4: What is the smallest emergency fund with which you wold be comfortable? $2500
This is an awesome informative post. Money making and saving your expenses is very important in terms of keeping up with your bills even though it may seem tough.
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