A month ago, I asked my readers to share their ideas about emergency funds, how much money it takes to cover 6 months worth of expenses, and the best place to stash emergency fund cash. I’ve been amazed by the response to the poll. More than 1000 readers have voted – and almost 50 left detailed answers in the comments section!
Here is a quick summary of the poll results, as of July 22, 2008.
For most folks, six months worth of expenses is somewhere between $8,000 and $25,000. But, for many, their goal is more than $30,000! That’s pretty interesting.
As for where to keep the emergecny fund, most opt for an online savings account, a few use a regular savings account, and still others use money market accounts from their local banks.
Because of the poll’s popularity, I’ve decided to keep it up for another month. So, if you haven’t already, head over, cast your vote, and leave a comment.
25 to 30K for a six month emergency fund sounds right if mortgage is around 1.5k, insurance another 1.5k, food expenses around 1k plus other expenses 1K.
I agree with GM. People cannot live on $8,000 for six months. That’s like saying you can live on $16,000/year (net) or $32,000/year gross (if you’re very liberal about the amount of taxes, insurance, etc. that might come out of one’s pay check). That’s pretty unrealistic unless you’re living in an extremely low cost area with extremely low expenses.
I’m in the MD Suburbs of DC and my mortgage, utilities, gas auto repair, food, auto insurance, home maintenance (minimum) and on an on would run me close to $4,500 to $5,000 a month and I don’t have an extravagant lifestyle by any means.
I agree with the Ken and GM. I just finished funding my Emergency Fund to last at least 8 months. If I lost all of my income, I would need at least $2500 a month to take care of the basic necessities.
P.S. I like the new site design!
Which six months? You need to be able to handle your highest six months. Most of my big annual expenses come due in the first part of the year. Property tax, income tax, insurance, holiday bills. Later in the year, expenses are lower because there are no big ticket expenses. My emergency fund has to cover the worst case. If your big expenses are spread out it’s less of a concern.
This year I started getting way more serious about my personal finances and started hearing about having an Emergency Fund and I figured I should save $5,000;however, the more I learned about what an Emergency Fund really was the more I knew $5,000 wouldn’t cut it. This article got me to actually run the numbers and yikes, to be truly protected for 8 months, I should have an Emergency Fund of $15,000.
As I understand it, the emergency fund is for 3-6 months of regular day to day expenses such as groceries and utilities. As a missionary we have had to work through this on a different level. Not just expenses but emergency evacuation funds as well. Ideal for us would be $10,000 but we are not there yet. We recently started living on a NCN basis, so we gotta keep on keeping on in case an emergency evac is needed.
Craig
I tell people at the minimum they need $5000.00 plus a $1000.00 for each person in the household. So my family needs $9000.00 in an emergency fund. Now that is not everything we have set aside but that money is in an account where I can easily get my hands on it.
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