Should You Have More Than a 3-6 Month Emergency Fund?
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- เผยแพร่เมื่อ 8 ก.พ. 2025
- Should You Have More Than a 3-6 Month Emergency Fund?
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I pushed to a minimum of a year in my emergency fund especially when going into a lot of uncertainty. The peace of mind is worth it
Agreed. I do 6 months expenses plus total of all expected near future large purchases, which generally falls between one and two years expenses. Reading the Psychology of Money right now and have only been more confident in my approach based on what I have read so far.
Same. Totally worth it.
I have a 6 month fund + a “five year fund” that could cover replacing two vehicles, a few family vacations and house renovations.
wow. that is amazing. wish we woke up even a few years earlier. we had an emergency fund of 4 months, for 20,000, but then I realized, after listening to the money guys, that we need our largest deductible, and in Florida, that is the hurricane deductible. so, in our case we need apx 35,000 for that. so much for the emergency fund. I guess it can sort of be a hybrid for both until we get where we need to, at the very least 50,000. sometimes this process just feels like it won't let us just relax and stop worrying about a budget. I never imagined making so much, and being on a budget, but that is what not doing things earlier does to you later. on paper we seem pretty solid compared to almost anyone, but it is the things that require large sums of cash that can become the most worrisome later. when I think about how the people who hardly saved must be feeling as they reach retirement age. at least they will have social security, and some medical, but with housing and rents being so expensive, it must be so scary.
54 year old here with a 12 month emergency fund. I’m looking to expand it to 36 months by the time I retire in my early 60s.
I've said this on previous videos. After being out of work for nearly a year in 2010 I aim for having a year's worth of expenses in my emergency fund
Yah. My wife and I are 47, for the first time ever in my life we bought a CD and TBill equivalent. We've been saving for some upcoming short term goals and after investing in growth oriented vehicles for so long, we almost forgot about how much the rise in interest rates are really a sweet deal for short term saving.
YES. 2020 showed us that we do.
I have about 75k in emergency funds.
That is something working on growing mine as a save for a home
That’s amazing. I am saving mine atm.
6 months plus sinking funds. Alot of people forget about sinking funds.
This! My "emergency fund" isn't massive but I have sinking funds that cover specific emergencies or they would be used as a backup EF if it came to it. Together they would cover me for quite a while
My monthly expenses are about 2k a month, so 6k emergency fund seems pretty lean. But I have a 2 income household and my job is extremely reliable
I think it also depends on if you are a homeowner, and the age of your home. I am a homeowner and my house was built in the early 70’s. I have a new water heater and a 2019 HVAC, but still keep about 6-7 months of expenses in my emergency fund because of unexpected repairs needed on my home. If I was a renter, I would only have 3 months of emergency fund
In my mind, repairs and maintenance are expected things you should plan for, even if you don't know when you'll need them. That for me is a separate sinking fund than the emergency fund.
@@richard77231 good point. I do have a “sinking fund” I fund with a set amount each month then half of my surplus at the end of the month (other half to brokerage). It doesn’t have a set expense in mind but includes things like engagement ring, vacation, car repairs, home repairs etc. I just like to have my 10k emergency fund there separate for anything that might come up in excess of the sinking fund
@@richard77231 I factor it in my budget, we keep $15,000 set aside for home and car repairs, separate from our normal savings
I can find 6 month CDs at around 5% (it varies from day to day) on Fidelity. I've drawn my cash down to 3 months of reserves, and have started a short term CD ladder. The question for me is what the value of liquidity is.
Yeah, I'm maxing out my I-Bonds every year, while keeping 2 months in cash. This is partially due to building up an I-Bond ladder for retirement, but also for mid-term savings (newish car in 5 years, paying off the mortgage when I'm 50).
I'm in the same boat with the mortgage, was putting an extra 1k a month towards it (3.875% interest) but recently opened a new high yield account at 5% and shifted that extra payment there for the time being. My existing high yield is paying 3.75% which is still pretty good but wouldn't have made me stop the extra payment.
Regardless the plan was to write a check a year from now and pay off the mortgage, which I can still do if rates come back down, but might as well have my money work a little harder for me while savings rates are high.
Where are you getting 5% on savings?
@@aaronliss8619 Primis, but they recently lowered it to 4.35 for new accounts. Those that got in early are still getting 5% for the time being. Otherwise the best right now is 4.55 which is still better than my other online bank Synchrony that is at 3.75
I think in 2024 you need at least $30,000 + in emergency funds
If you’re a single person with children how much is the recommended emergency fund? I didn’t catch it.
I just read "The Two Income Trap" by Elizabeth Warren and her daughter and the thesis in the book is contrary to what Brian says. Brian says that two incomes are better than one, "One income is going to lend itself to higher cash reserves than two incomes...One of us loses their job, we'll just lean on the other one." The book outlines that this logic can be flawed if the family's lifestyle depends on both incomes. When one income is lost, they can no longer afford the necessities, ie mortgage/rent, child care, health insurance. His logic is sound if the family can afford to live on one income-- the other partner can go to work to bring in additional income while they supplement with their cash savings. I would say the advice is more nuanced and depends on the household income vs expenses. I think the 3-6 months savings should be based off total household expenses and should skew towards 6 months depending on the risks involved.
I haven't read the book, but I don't see how his logic is flawed. Even if you can't afford to live off of one income, you won't need to pull a full month's expenses out of the e-fund every month. If one of us loses our job we'll be at a $5k deficit each month and drain the $50k e-fund in 10 months. If both of us lose our job we'll be at a $10k deficit and drain it in 5 months. (Made up numbers).
But I agree (as do B&B, I think) that it should be based on expenses. I also don't see any real safety for debt-free, high earners to skew towards 3 months so I'm with you there. Personally I aim for 3 months, but also have other large buckets to pull from in an emergency (vacation fund, major home repairs, new car, etc) that end up being about another 3 months.
I'm thankful they changed the intro... it's kind of weird since they're cohosts lol.
maybe someone could help me with this? so, if a retired couple has a small pension and social security that adds up to apx 80,000, and they take 50,000 a year from a brokerage link, inside of a 401k account, does that mean that they will be taxed on the 80,000 at 12%, and then at 15% on the 50,000 in the brokerage account?
If you have multiple Rental Houses (Paid for) and your typical Vacancy is 2-Weeks! So, you have multiple sources of income! You also get more than enough from Your Rentals to caver unemployment!
Can you trim down your Emergency Fund?
“Daddy of cash reserves”
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Once you reach a certain level of wealth you no longer need an emergency fund.
@Cj Johnson please explain.
Does it make sense to pay tax on earnings from 4% interest when you have a 3% mortgage? I would write a check for the mortgage and be done. Trust me, that money will quickly be saved again when a person is debt free.
Sunday, I had a friend say the same thing. He is earning interest and paying taxes on it while paying a mortgage. I JUST DON'T GET IT!!!!
I think cash makes people feel wealthier than they are in real life. My friend clings to his cash. I just live debt free. I probably feel poorer than I actually am. That feeling probably keeps me from spending as much money as I would with more cash. For instance, I ate a salad for lunch today that I prepared myself. I bet my friend hit a restaurant atleast once today.
It can make sense if you don't want to (or don't think you'll be able to) mortgage the house to pay for an emergency, yeah. I highly doubt B&B have ever said to prioritize cash over paying your mortgage as a way to earn slightly more (especially since Brian has said he's personally prioritizing paying off his mortgage).
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I’m making $555 a month in interest from savings account.
Quite the savings account, must have tons more coming in from other accounts too
If you don’t have at least a $100k in cash you are poor
Dude wtf
😂😂😂😂😂😂 I think having $100k in cash is stupid,why not invest it to earn more 😂
I just use my HELOC as an EF
Be careful. HELOCs can lower your credit limit without notice.
@@HoustonTom only if LTV becomes too high. I have plenty of equity
Not technically how it works but you do you
@@droid2D2C3P0 how does it work?
@@williamforsythe9180 debt isn't an emergency fund.....