e-fund? (maybe a stupid question …)

mjS51274 · May 2014

So, this might be a stupid question, but I'm trying to learn more about investing and I keep seeing this e-fund thing pop up in conversations. What type of fund is it (in layman's terms please

and how does it work?

maple2 · May 2014

e-fund is short for emergency fund. It's basically money that you have saved to deal with unexpected expenses. For some people the e-fund is only for major emergencies like job loss or major medical bills while others use it for things like car repairs or other expenses that are a given (cars are going to break down) but unpredictable which makes them difficult to plan for. Most people just keep their e-fund in a savings account, but some people put it into other types of relatively low risk investments. The most important thing is that it can be easily accessed in the event of an emergency.

jessica490 · May 2014

The suggested amount for an e-fund is 6-8 months worth of bare bones living expenses. Of course, everyone has their own opinion on that amount but it really just depends on your circumstances and what you feel comfortable with

For our e-fund, we keep it in a Capital One 360 account (formley ING Direct). It takes 2 business days to transfer the money to and from our Bank of American checking account so if an emergency ever came up we would just charge it and then transfer the money to pay the bill off in full.

KatieCutie05 · May 2014

maple2 pretty much covered it. To me an emergency fund is cash and/or a basic savings account - not connected to my checking account but that is easy to get to (not something thats going to give me fees to withdrawl it) but not too easy (a checking account padding doesn't count) that has a set amount of money in that is ONLY touched for emergencies only - no wants and its not a car replacement fund or i want a new couch fund. its a "shit hits the fan" fund. Like job loss, medical emergency, car breaks down, AC breaks in the middle of a 100 degree summer kind of thing. Because lets face the second you use it for a non emergency your going to have a real emergency and not have it. Its my "im not going further into debt" fund.

A fully funded emergency fund is 3-6 months of expenses... but closer to 6. Some people (myself included) chose to keep a smaller starter emergency fund in order to pay off debt sooner.

lifeonthehill · May 2014

I agree with the people who have already posted.

Personally we have an incredibly low cost of living. About $400/month. We realized a 6 month e-fund would be less than $3,000 and neither of us were comfortable with such a small amount so we bumped it up to $10,000 which is two years of living expenses.

It is in our savings account connected to the checking that has no fees and no wait time. Which we are happy with because when H blew the tire on the car and we didn't have it in the bank we had to pull from it right away. His family was willing to loan the money but good god do we hate owing people money.

e-fund? (maybe a stupid question …)

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