I just read an article on MSN.com stating that most people don’t have the recommended 6-months of living expenses saved up. Part of this is due to the crummy economy and the difficulty of saving that much money if work is sporadic. Take for instance a person who makes $50,000 and needs $3,000 per month for living expenses. (Okay. Maybe my figures are high because I live in an expensive city – please comment if this is the case). They need to save $18,000 for that 6-month cushion. If they can save $500 per month towards an ER fund, it will take them 36 months, or 3 years to save that amount. And that doesn’t take into consideration any retirement savings.

I know that I don’t have 6-months of living expenses saved up in my emergency fund. Instead I have some savings in my ER fund, some in my wealth building fund, some in my large purchase fund, and some slush money that covers months when I come up short. But even with all of that added together, it wouldn’t cover 6-months of expenses. What would it take for me to save up my 6-month cushion? At $500 per month it would take me 5 years to sock away enough for 6-months of expenses. I think I’d rather invest half of that into other accounts and build wealth myself.

So how does your ER fund match up?


  1. Money Beagle Reply

    We actually have a pretty decent sized fund earmarked for emergencies. It’s not six months worth, but we do have other assets that we could tap if need be. For example, we also have a ‘New Roof’ fund and other long term savings funds along those lines. If push came to shove, we could tap into those and just delay the projected associated expenses by a little longer until they are rebuilt. But of course we’re planning on it never coming to that!

    • @Money Beagle – I think that’s the beauty of having multiple savings accounts and wealth building funds. If a dire emergency really did happen, at least you have options instead of just one source of savings. thanks for sharing!

  2. Sustainable PF Reply

    We currently have about 6 months but I suspect that will be cut by 66% next month as we consider paying off chunks of debt. In my post today, where I discuss our personal financial plan I ask our readers their thoughts on what we should be saving. I’m really not sure! 6 months seems excessive to me given our (outlined) circumstances.

    • @Sustainable PF – I think 6 months is excessive too depending on circumstances. If you depend on only one source of income, then maybe 6-months is wise, but if multiple streams are coming in then saving 6-months may not be necessary. It’s unlikely that all your streams of income would dry up simultaneously. Thanks for sharing!

  3. retirebyforty Reply

    We have about 4 months. I think that’s about right since we are both working. Even if one of us lose our job, that emergency saving would translate to over a year of living expense as long as one of us are still working.
    Mrs. RB40 just dropped a bomb on me this morning and said she wants 100k in e fund before I quit my job. 😉

  4. Financial Samurai Reply

    I donno… I think mainstream articles really like to paint bad stuff about the masses. I think most people are fine!

  5. Miss T @ Prairie Eco-Thrifter Reply

    Ours is not yet where we want it to be but we are working at it. Our goal is to have 6 months expenses covered at minimum

  6. We do not have 6 month either, we have about 3 months. My DH’s job is extremely secure for the next three years and I would rather put as much money in my Roth as I can over these three years then add to the EF. Once my DH graduates and becomes a post-doc, I’ll add to the EF but it will probably be bonds and stocks not cash.

  7. @retirebyforty
    Whoa! That’s would be a very impressive ER fund. I’m sure you’ll be able to negotiate a less hefty fund before quitting your job. 😉 Is she including your retirement or wealth building accounts into this amount?

  8. @Financial Samurai
    I think that most people “feel” just fine about their savings, but probably don’t have enough actually saved. Maybe that’s the problem; we feel just fine about our finances during the good times but realize during the bad ones that we’re not nearly as prepared as we thought we were!

  9. @Ginger
    You bring up a good point; Does an ER fund have to be in cash? Maybe it can also include a few bonds, mutual funds, or stocks – as long as you also have wealth building funds set aside as well.

  10. I don’t think I need 6 months of expenses, but then, I also know that my parents could give me a place to stay if I couldn’t pay rent for an extended period, and I don’t have kids that need to stay in school or anything. So far I’ve mostly used my emergency fund for vet bills, which take a long time to get reimbursed by the pet insurance company.

    I think 6 months is excessive for a single person with no kids, who can be flexible, but more necessary for a family with kids who can’t be flexible with their bills once they realize they’re going to be living off their emergency fund for more than 6 months.

    • @Kellen – I think that’s a good point; ER funds vary with age as well as circumstances like having a family to care for. When I was in my 20’s, I probably didn’t need much of an ER fund, maybe just enough to cover a month or two’s rent. But now that I’m older (though I don’t have kids) I need much more as my bills have gotten bigger!

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