Emergency Savings Accounts: Amount and Purpose

bmo88 · November 2015

Hello everyone! My DH and I have a snow day today. So while there is two and a half feet in the roads, I decided to hunker down, drink hot chocolate and get on the Nest.

So my questions are:

What is your goal for your emergency savings account? Is it expenses or income based? (months/amount)
How much do you currently have saved in your emergency savings account? (months/amount)
What do you define as an "emergency" and reason to spend it?

bmo88 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)
Our goal is $18,000, which is 6 months of expenses

How much do you currently have save in your emergency savings account? (months/amount)

Currently, we have $16,500, which is about 4.5 months of expenses

What do you define as an "emergency" and reason to spend it?

We consider job loss, major medical situation to be an emergency or significant home/car repair that could not be deferred or financed. We wouldn't use it for appliances failing other than a boiler or possibly a major vehicle repair if it wouldn't be able to run otherwise.

jessica490 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Our goal is $20K, which would be 8 months of expenses. Just learned earlier this year we will be integrating with our parent company so my job may not be guaranteed within the next few years...

How much do you currently have save in your emergency savings account? (months/amount)

Right now we have $11,700K in there which we are working on building up since we moved into our new house. That would probably cover 4 months of expenses for us

What do you define as an "emergency" and reason to spend it?

An emergency for us would be an unexpected accident with medical expenses, loosing a job, a house repair/emergency, car emergency, vet emergency. If we have to take money from it we always put it back

jessica490 · November 2015

Snow already? Eek! We've seen only a few hours of snow flurries this year so far

bmo88 · November 2015

jessica490 said:

Snow already? Eek! We've seen only a few hours of snow flurries this year so far

Yeah I am not happy about it. I lead an organization, so I have to basically work regardless and just do it from home. I also hate the cold and snow. Even though I live in Colorado, I don't ski or snowboard. So I really don't enjoy the winter very much.

julieanne912 · November 2015

I'm just getting mine going after recovering from wedding spending, and it's just for me my own personal bills as H has his own savings. But here goes...

What is your goal for your emergency savings account? Is expenses or income based? (months/amount) I would like to get 3 months saved up, of my expenses (car payment, student loans, utilities, gas and groceries), since I could scrimp on a lot of things to live on less than my current income if I had to.
How much do you currently have save in your emergency savings account? (months/amount) Not much About $300... but again, just got it started a month ago.
What do you define as an "emergency" and reason to spend it? - Purely for job loss for me. H's savings covers anything else major (dog expenses, and the unlikely event of an expensive home/vehicle repair (home is new, my car is 2013, his is 2015). Might end up dipping into it when we have a baby to help cover expenses so I can take the full 12 weeks... short term disability only covers 6-8 weeks and that's only 60% of income.

ETA: You must be down south! Up here in north Denver metro we hardly got any. Actually made for a very pleasant commute as there was pretty much no traffic. And, my work called for a jeans day so that's good enough for me.

abrewer5 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Our goal is $15000 which is 6 months of expenses for us.

How much do you currently have save in your emergency savings account? (months/amount)

Currently we have $2250 while I work on debt payoff, a little less than 2 months of expenses

What do you define as an "emergency" and reason to spend it?

Job loss, medical emergency, major home repair, something majorly wrong with our dog, those kinds of things. I probably wouldn't use the money if an appliance broke or something like that. Once debt is paid off I plan to add a "home" savings account for things like that. (Not sure why this part is bold but it won't go away)

--Edited for formatting.

vlagrl29 · November 2015

It's been awhile since I added it all up, but right now its around 5k and ideally I want 10k in it. For us its not based on job loss - its more about unexpected medical expenses, car and house repairs

bmo88 · November 2015

julieanne912
ETA: You must be down south! Up here in north Denver metro we hardly got any. Actually made for a very pleasant commute as there was pretty much no traffic. And, my work called for a jeans day so that's good enough for me.

Yep, northeast Colorado Springs! We got slammed and there is nothing to block wind. So it's 80mph winds, 3-4 ft snow drifts and snow packed roads.

julieanne912 · November 2015

bmo88 said:

julieanne912
ETA: You must be down south! Up here in north Denver metro we hardly got any. Actually made for a very pleasant commute as there was pretty much no traffic. And, my work called for a jeans day so that's good enough for me.

Yep, northeast Colorado Springs! We got slammed and there is nothing to block wind. So it's 80mph winds, 3-4 ft snow drifts and snow packed roads.

Yuck! I live west of Brighton and we just got maybe 2-3" of snow and lots of wind that blew it all off the roads.

Mustard76 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)
- Our goal is $50,000 which is 12 months of non bare bones expenses. We're aiming for $15,000 in another liquid account that is our go-to for cash.

How much do you currently have save in your emergency savings account? (months/amount)
- Currently, we have $20,000 which is about 4.5 months of expenses. We have $10,000 in another account that we would tap first if we needed to.

What do you define as an "emergency" and reason to spend it?
- Our smaller account is our first tap for any "emergency." Dog emergency vet bill, medical expenses, appliance replacement, home stuff, etc. Our larger actual emergency is for job/income loss. That's our last resort cash.

Xstatic3333 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)
Our intermediate goal is $5,000; our eventual long term goal is $15,000. These are based less on monthly expenses then amounts that make us feel safe. The reason for the intermediate goal is that we've decided between us that beefing up retirement was a higher priority since H started his savings pretty late in life.
How much do you currently have save in your emergency savings account? (months/amount)
$2,100. We realized that to have our e-fund be a true e-fund, we need to do a better job of saving and planning for non-emergency "surprise" expenses like tax bills we didn't see coming, tire blowouts, mid level home repairs, etc. We figured out contributions for a sinking fund for these types of things and are now treating them like a bill that must be paid. One month in it's working well, but has slowed our e-fund saving progress a bit.
What do you define as an "emergency" and reason to spend it?
Hopefully with our new sinking funds account, the e-fund will just be for a double job loss, medical emergencies, and homeowners' insurance deductibles in the event of a natural disaster. Usually we can cash flow our health and car insurance deductibles if need be.

short+sassy · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

I would like to someday be at $12K, which is 6 months of bare bone expenses.

How much do you currently have save in your emergency savings account? (months/amount)

I currently only keep $1,000 in an e-fund, but I have a HELOC I can dip into if I need more. As long as I have a balance on my HELOC, I'd rather just pay that down before saving for the BIG e-fund because it is easily accessible cash anyway.

What do you define as an "emergency" and reason to spend it?

For my current $1,000 e-fund, I'm fairly liberal as to what I would consider an emergency. Car repair, basic home repair...whatever I might suddenly and unexpectedly need cash for. But then I pay myself back. I've rarely needed to dip into it.

Now the bigger e-fund I will one day have, that would be more for something major like a job loss. However, I do have multiple streams of income, which would definitely soften the blow of losing my f/t job and make that $12K e-fund last a whole lot longer.

cbee817 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Ours has been in place for at least 3 years now- $50,000 or 7 months of expenses. We are a family of 4, both of us work, have a mortgage, and a car loan. For 2016, it should be about 9 months of expenses. The bulk of 2015 had 2 kids in day care full time (about $1800/month) and our sewer repair bill ($700/month), where 2016 has just DD#2 in day care full time and DD#1 in after school 3 times a week (about $1200/month).

How much do you currently have save in your emergency savings account? (months/amount)

Full amount is there- we add to it throughout the year and use the extra to fully fund smaller home/car repairs, Roth IRA accounts, and the girls' 529 plans.

What do you define as an "emergency" and reason to spend it?

Emergency for us boils down to my job loss- DH has had lay offs with a previous school district and his current one is much more stable. I make about 2/3 of our family income, so it would be to supplement my income while I look for another job. We've had our share of large home repairs so nothing too crazy should happen there (new sewer line, new roof, new HWT, furnace, plumbing, porch, etc), DH has a new car (2015) so he shouldn't need any repairs for a bit, and I would just finance a car if I needed a newer one (currently drive a 2003, but it's in really good shape). Thankfully, medical expenses aren't really an issue- we have a copay plan with my work and if I lost my job, we would move to DH's (he also has a copay plan at his work). Also, if one of us did lose our jobs, we would not pull DD#1 from day care- spots like that are insanely hard to come by plus she does so amazing there and will be in pre-K next year, so we need to keep her spot.

orangehills · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount) - I want another $2000 in place by the end of 2016 and it's expenses based.
How much do you currently have save in your emergency savings account? (months/amount) - by the end of this year we'll have $22,000. That is a 6 month efund for us. But, that's if we both lost our job. If only one of us lost our job, that would go for like a year.
What do you define as an "emergency" and reason to spend it? - Losing a job, medical emergency, major house/animal/car emergency. If we had to spend some, we would then start saving to put it back and everything else would go on hold till we replenished it. Once the efund is established, we then each month will have a normal savings fund that will be for normal bigger ticket things like vacations or stuff for the house or that big order of contact lenses or big vet bill.

CuriousKiddosMama · November 2015

When I quit working we upped our emergency savings fund to $40,000. I wasn't comfortable with much lower than that, but when we get our mortgage paid off again, we will drop it down a bit, probably to $25,000. That is about 6 months of our budget, eliminating most discressionary spending but not all (like continuing day care and speech for ds).

Since we have had an emergency fund, we actually haven't had to pull from our emergency fund. We have been able to cash flow the little things that have come up. One thing that would be an emergency would be a job loss. Or a major event with a house/car/ hospitalization that we couldn't cash flow.

als1982 · November 2015

We feel completely comfortable with an emergency fund of $1,000.

Once one of the following happens, we will increase our liquid savings:

1. Get pregnant
2. Become completely debt free
3. H becomes self employed

bmo88 · November 2015

Thanks for all the responses so far. It's interesting to hear different perspectives, goals and approaches.

I should have added, while we have debt, we feel the need to have an emergency fund at 6 months because we both work at the same start up. While it is quite stable, we sleep easier at night knowing we have our back up plan. If we worked at different organizations or more established places (though anything could still happen), we would probably lower our emergency fund until debt was paid off.

simplyelise · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Ultimate goal is 6 months of expenses which is around 15k right now. DH and I will need to hash some of this out after we finish paying off student loans. I would like to get to 3 months expenses and then split savings between retirement/down payment/efund, because we won't have much risk at all when we're debt free. Our OOP max is $2000 and our car deductibles are another $1000 together. We don't have kids and we make pretty similar amounts and could cover all of our monthly expenses (after we're debt free) on either salary. And we're already saving for a car replacement for our 2000 malibu.

How much do you currently have save in your emergency savings account?

$2000 - we have another $1100 in a car replacement fund that we could use if it was really needed. And we could divert about $2000/month to an unexpected expense if it came up.

What do you define as an "emergency" and reason to spend it?

Mostly just a job loss or catastrophic health issue. We don't have a house or kids, so yeah, we just don't have a ton of risk right now. DH was unemployed for about 9 weeks at the beginning of 2015 and he did draw on unemployment, but we still never touched the efund. It would have to be pretty drastic.

KAdams767 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount) We're good at $10k. It's not really based on expenses or income, just an amount we feel comfortable leaving in a no-interest account. We are confident that at this point in our lives, there isn't much that would come up that we would need more than $10k in cash immediately.
How much do you currently have save in your emergency savings account? (months/amount) $10k. This would be about 3-4 months of expenses if we didn't cut back on anything and had absolutely no income.
What do you define as an "emergency" and reason to spend it? Ransom for either of us or the dog? I don't know, we are very fortunate to be in a good financial position in life right now and this is really our last resort, shit has entirely hit the fan, money. We would have to both be unemployed for an extended period of time or one of us would need to be very sick in order to touch this money. We save for home repairs, car repairs/new cars, retirement, vacations, and other things via separate savings and just never touch this account. We'd have to burn through all of the other savings first. We haven't taken even a dollar out of the account in at least 3 or 4 years.

dragonstarjk · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount) We don't really have a set goal; we've been comfortable with $1K but I think eventually $5K would be a nice round number.How much do you currently have save in your emergency savings account? (months/amount)$2K; I am going to try to add another $1K by the end of 2016What do you define as an "emergency" and reason to spend it?A reason to spend the e-fund would be--job loss, major medical issue for us or our dogs--I can't really think of anything else that would qualify as a true emergency. We would drain all other savings accounts first and possibly use up some of the financing options at our disposal before we would spend this money.

hoffse · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Well we are comfortable with what we have right now. However, we are probably going to start adding $5k/year starting in 2016 until one of us is up for equity partner. Unless my firm changes track, I'll be up for equity in 4 years. The thing is, they back-load partner income in a really serious way to make sure the firm makes budget and nobody has to make a capital contribution partway through the year. Well that's great at the end of the year, but at the beginning of the year you see very little of it. But you still pay estimated quarterly taxes as though your income is stable throughout the year. So during that first year of equity, a lot of people run into cash flow issues for the first 9 months or so because estimated taxes are eating up most of your take-home. Anyway, we're going to start slowly stashing money away for that event next year so that we're ready when it happens. If my firm changes track or I move into a different position, we'll probably still view that money as part of our emergency fund, and we'll save it for when H is up for equity. There's a really high likelihood that at least one of us will get there.

How much do you currently have save in your emergency savings account?

Our e-fund doesn't have a padlock on it or anything, but we try not to dip below $10K across all of our savings accounts at any given time.

What do you define as an "emergency" and reason to spend it?

Probably having a tornado hit the house or something like that. We have medical emergencies covered through our HSA. Job loss isn't a killer for us because we could live on one income if we had to (that might change after we have kids though). Our jobs are stable, and we both get cold calls for job openings on a regular basis. Realistically, we mostly use our e-fund to help us even out cash flow for large reimbursable expenses. My LLM tuition is the big one, but we've also used it to cover things like flights and hotels while waiting to be reimbursed. Our e-fund rarely drops below $10K, but when it does it's usually just for a few days while I'm waiting for the reimbursements to clear.

kmurphy2131 · November 2015

What is your goal for your emergency savings account? Is expenses or income based? (months/amount)

Our goal is about $34,000. That is 6 months of expenses if we both lost our jobs but continued our current style of living without any changes. If we both lost our jobs we can seriously cut the grocery bill (I make almost everything from scratch but I would have time to drive to 5 stores to get good deals), ditch our cleaning lady (yes, a splurge in our budget but a great tool for a happy marriage), and obviously our dog wouldn't need daycare or a dog walker. We could probably stretch it to 8 months, maybe even a year especially if we moved in with family (we rent right now, but want to own within the year).

How much do you currently have save in your emergency savings account? (months/amount)

$31,000, so probably around 6 months of a modified budget - not quite barebones, not quite current lifestyle.

What do you define as an "emergency" and reason to spend it?

Job loss or other income loss (not necessarily job loss but if someone is out of work even for illness or between jobs), if something happened to our dog and vet bills couldn't be paid with cash flow (though I would probably use care credit), or some sort of medical bill for us (but we have no deductible and amazing insurance). I would possibly touch it to use a little for a car downpayment if we had to get a new car, and would touch it for a car repair we couldn't cashflow.

PurpleBookmark · November 2015

1. Our goal is 6 months of expenses. For us that would be roughly $14,000 in our current living situation

2. Ugh, only $1,200. We were hit by a lot of medical expenses last year, we are working very hard to get this number up. Our tax return will help immensely.

3. I would use the money to cover expenses in the case of a job loss, pay for medical bills, or pay for anything that was a true need that we couldn't cash flow. For example winter boots or winter coat for one of our kids. We've also used money in the past from our fund to pay for brake repairs on our car.

formerlyGDaisy09 · November 2015

What is your goal for your emergency savings account? Is it expenses or income based? (months/amount)

Our goal is 3 months worth of bare-bones expenses. So our budget minus: Fun money, entertainment, agility classes for the dogs, haircuts, shopping, and pairing down the grocery/household budget by about $200 (we used to live on that when we were in debt-payoff mode, we could do it again.) so the goal is $14,000.
How much do you currently have saved in your emergency savings account? (months/amount)

We have just over 2 months in savings now. and I count what we have in all our savings accounts, clearly if we're in that desperate of a situation I'm more than happy to pull from savings ear-marked for things like vacation or home improvement. That said, until we've got closer to 2 months in our general savings/e-fund I think twice about draining any one of those earmarked accounts.
What do you define as an "emergency" and reason to spend it?

An emergency for us would qualify as some kind of catastrophic job loss or medical event. I'd also qualify emergency vet bills here. Something like the furnace going in the middle of winter. All that said, we feel good knowing that we have some safety nets for some of these. for example for an emergency at the vet; we have a carecredit card, any charge over $200 on that card is automatically interest free for 6 months, so we feel good knowing we can try to cash-flow some of a huge vet emergency over 5-6 months and only dip into the e-fund for the balance. Both hospitals in our area will also put you on an interest-free repayment plan if you ask, so worry about medical bills is not terrible, that said, what I've seen in the past is that they ask for about 10% of the balance monthly...so if we hit our MaxOOP with one event we'd be on the hook for about $800 a month. I'm not opposed to using 0% interest offers, if we could finance something like a new furnace at 0% I'd definitely do it, if my options were that or drain our savings.

...so really our emergency money is only for if one or both of us is/are out of work.

brij2006 · November 2015

What is your goal for your emergency savings account? Is it expenses or income based? (months/amount)
Our goal is 6 months of living expenses. This is on a bare bones budget. So given DD wouldn't go to daycare because one of us lost our job, and our gas expense would plummet due to one of us not driving too and from work.
How much do you currently have saved in your emergency savings account? (months/amount)
$15,000 which equates to 6 months on our current budget, or 8 months on a bare bones budget. We can also make all of our expenses on 1 persons' income. So it would take something drastic for us to dip into this.
What do you define as an "emergency" and reason to spend it?
Oh man, I'm a money hoarder. We would probably dip into it for an unexpected, large house repair before we would from a job loss. If either of us were to lose our job, we would cut everything before dipping into the E-fund.
As for any unexpected major repairs, we would probably try to find a way to cash flow it over a couple of months or pull from our housing maintenance savings instead.

Emergency Savings Accounts: Amount and Purpose

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