What do YOU consider the ideal emergency fund?

[cougs4bcs]

well, i have an e-fund of 8k. My monthly expenses are ~1.6k. I don't know if this is too much or too little, but I did survive getting laid off from work recently and I didn't even come close to touching it. I received unemployment though so things could have worked out differently I guess. Anyways, 8k is 5 months of expenses for me and I believe one should have 6 months of regular expenses. I'm a little risk averse and feel that 6 months without cutting anything back is the way to go.

[kork13]

I'm a little risk averse and feel that 6 months without cutting anything back is the way to go.

Agreed... This is how I look at it as well, though I know many people count their 6 months' expenses from their baseline monthly costs (sans eating out, cable, starbucks, etc). I think what's really most important is that the amount is enough to make you feel secure & comfortable, whatever it takes to do that for you.

[bigdaddybus]

I was just reading a discussion about putting your EF into a Roth IRA - if you never need it then it is there for retirement and if you do need it, you can take out the original investment - just don't touch the gains.

This is partly how my family does it. I keep $20,000 in a savings account (3 month fund for our family of 6) and we have another $40,000+ we have contributed to ROTHs if we ever need it.

[thesimplemoneyblog]

A good portion of it depends on how flexible your expenses are. If you have a lot of discretionary expenses, then less than 6 months of current LE could be good, but if you have a lot of fixed, non-discretionary expenses, then more than 6 months could be warranted. Also, if there are two of you and both of you work, then you may need less than the 6 months (and vice-a-versa for only one working spouse/SO), since you may have the other income to fall back on should times get tough (provided you two don't work for the same company or industry!).

[scfr]

Agree with the others who say it depends on your particular circumstances. A young healthy couple with 2 incomes and no children who could live off of 1 income if necessary needs less than an older 1-income family where someone in the family has medical issues.

My bare minimum for comfort is 1 year of basic expenses (fixed expenses plus reduced variable expenses) ... although we both work, my husband is self-employed with a varying income and we are older so could expect a longer period of unemployment and reduced income if I lost my job or his business went under. 1 year would buy us enough time to make and act on some major decisions such as selling the house, if necessary. Frankly, it's hard to imagine a scenario where selling the house would be anything other than a willing choice, but you never know ...

[frugalharry]

I've never kept an emergency fund my entire life. Yes, it's not a good practice. But it is because I do not have spare to keep.

This thread is an eye opener for me.

[Nika]

I think it should be whatever expenses you would have.

For example, most people think they will go "bare bones" budget in one day if they lost a job, but the reality of the situation is, they won't.

I am honest with myself - we are not going to be using internet at the library and cancel cable, so we have to consider that in looking at the amount we would need.

Also, sure, you may not need daycare or commuting expenses if you lost your job, but you may need COBRA...

And yes, if you lost a job you can cook all your meals from scratch and not eat out. But, if your emergency is a loved one in a hospital, and you are spending your days there, you might not have the time or the energy to leave your loved one there alone and go meal planning...

[fruitbowlk]

Since I have lost my job twice and I still don't have a perm job. I have to have no less thatn 5, 000 in my EF inorder for me to feel somewhat safe.

[SmartSpender]

Budget

Make sure you know what you spend on a monthly basis (can be a rough estimate on everything besides your bills) keep an extra month of those expenses in a checking account, and 4-6 months in a savings account and you'll be golden. A lot of people think that if you have an availibe credit balance on your credit cards that means an emergency reserve. No such case. Assets minus liabilities equals net worth - debt is not part of your net worth.

Smart Spender