Current times have started getting me thinking, just how much of an emergency fund is enough?
I'm curious to know, how many months of cash do you have deliberately set aside in your emergency fund? (in terms of months worth of living expenses)
How Much Do You Have in Your Emergency Fund?
LemonShapedRock on 11/07/2020 - 20:45
Poll Options
- 131Nothing
- 28Less than 1 month of living expenses
- 381 month of living expenses
- 282 months of living expenses
- 1133 months of living expenses
- 184 months of living expenses
- 85 months of living expenses
- 1056 months of living expenses
- 269 months of living expenses
- 67612 months of living expenses
Comments
My goal for my emergency fund (2 person household) is ~$10k and our monthly living expenses is approximately $6k. Unfortunately, we got about halfway and then had to use all of it for several vet fees - at least we had the cash to cover it!
We put aside at least $100 a week into it and it's supposed to also cover emergency/medical/dental (we don't have private healthcare). We have separate money put aside for bills, expected expenses, a managed investment portfolio (outside of super) to cover replacing cars, and I have a very good income protection cover outside of super.
I highly recommend speaking to a financial advisor if you need help aligning your finances, goals, budget.
I have been saving for my early retirement. I plan to retire before 50yo but the current situation is pushing that date further, and it's only getting worst :(
Just marry someone overseas.
I have $9999 in super, but I'm earning $9999 in income per every 10 years.
About tree fiddy.
Emergency fund, my preference is to have 18 months worth of expenses (myself, wife + 1 kid)
It's at about 5 years worth at present.
I've only learnt a bit of investing in the share market since May 2019, so I'm slowly DCAing some cash that way. My goal is the other way, reduce the current emergency funds to put more into investment.
Have about 5 years in cash, another 5 years in stock assuming no growth in stock value.
Why so much in cash? Unless you’re retired (no income source), I would have thought you shouldn’t need to plan for a 5 year dry spell.
Not retired - far from it, but sold my investment property just prior to covid. Now it sits in the offset account of my PPOR.
Nice work on the investment property! At least getting some saving in the offset.
Any plans for a new investment? I would have been tempted to have some of that money that’s above and beyond your emergency fund to take advantage of the markets during covid.@financialminimalism: The amount that I have in stock was all invested in march and April, so I guess I've already taken advantage of the markets during covid. I still regularly contribute to my spaceship investment account and will deploy more funds into stocks.
4x unopened 4 packs of eneloop pros.
Enough post apocalypse currency to last me 2 years imoThere’s an emergency fund????!???
Kinda surprised how many 12 month options there is here. The Ozbargain mentality is probably one which encourages having good savings.
Frugality, being wise with money, not spending RRP on things… Whilst the poll may not be 100% truthful I don't think it's far fetched to say that people here may be good with their money.
enough saving for 3-4 years.. depends on how stable usd is
One year worth of rent and food. The food will be basic. That covers if I lose my job and cannot get employed
No poll option for jobseeker
I have 5k in my emergency fund which will last a little over 3 months. Outside that i have no savings as i am throwing all disposable income into my car loan.
when you need to use the emergency fund, the "estimated" living expenses are expected to less because you should try to minimize your spending, and avoid to spend on non-essentials right?
I'd would love to see the voting to extend to 1.5 years, 2 years, over 2 years :-D
Yep true. It shouldn’t include non-committed mixes to haves, that wouldn’t be an emergency situation :-)
Having said that, I don’t think people should have more than 12 months expenses saved up in an emergency fund. I think there’s better things you could be doing with your money.
The problem with sitting on cash is that it generally depreciates in time. If possible you are far better off working out how to invest it in a manner that generates growth, even in these uncertain times. Remember someone always makes money no matter whether the market is going up or down, its just a matter of working out how to get your hands on a slice of it. Likewise putting all your eggs in one basket is far riskier than spreading the risk, whether that be an investment, your savings or your job. A lot easier to sleep at night.
I wouldn't be happy with myself keeping funds with low interest rates that I could work for much higher rates . I suggest you take a long look at all the opportunity costs you are missing out on short and long term !
So for me virtually nothing in cash ( CC's will cover my butt ) but can raise a lot from various ( WORKING ) assets in days if required .But we’re talking about an emergency fund… not an investment strategy to maximize growth.
Opportunity cost for an emergency fund is not having money to pay your bills or keep a roof over your head.
Nothing.
Job Seeker payments on the old rate can cover all my living expenses with $120 a fortnight left to spare.
But I am also in no debt, own a $70,000 high yield AMG and pay $370 a month in rent.
The only other investment I have is a cactus garden worth about $40,000 and has only cost an investment of 4 years and $18,0006 months of my mortgage and modest living expenses.
Emergency fund =/= Net worth - property
I don't know how to feel about this thread. If these answers are legit it's making me feel like I'm terrible with money. We live a pretty modest lifestyle however do eat out probably once a week and go on 1-2 holidays a year.
My situation:
32yo + wife + 2 yo son
300K / 750K house paid off. Offset sitting at 2K.
0 credit card debt
General spending account hovers around the 4K amount.Due to COVID we're on 40% reduced salary (working 3 days per week) so that's a big hit this year. However even in past years we've never really had a big rainy day fund. Got to like 12K at one stage.
Are we really bad with money and should seek some financial advice/start saving a lot more? Or are most of the people responding a bit older and have had time to save up more?
You're doing just fine. Better than a lot out there, trust in yourself. You have 0 high interest debt (car or credit card). You have 300k paid off in your mortgage which I am assuming is available for re-draw when you need it during 'emergency'.
The only tip I can give is, if it was me, I'd rather have most of that 300k sitting in my offset than in the mortgage account. Offset is 'your' money. Mortgage account is 'banks' money.
Mathematically it works out to be the same, it just means the bank on their rainy day cannot restrict you from re-drawing if sh*t hits the fan in the banking world.
Please do your own research, no advice.
It's hard to say if you're bad with money without knowing what you earn. If you both ordinarily earn $200k is very different to if you are a single income earning $50k. If the 300k paid off is redrawable/accessible, then I'd say you're doing pretty well.
I'd personally never be comfortable with only $6-12k in my accounts, as our mortgage/general living expenses would burn through that in no time.
Do you need separate spending vs offset accounts? We can use our offset as an everyday account pretty easily, but may depend on how the bank structures things.
Keep about 50k in offset just in case the proverbial hits the fan..and maybe 30k in credit cards
Was having $2000 last month, then logged into Ozbargain………
15k minimum
Now covid can't go anywhere so can't really spend unless u are into online shopping.
If really in need of cash for emergency, I will either just access the offset acct or redraw from homeloan if needed.
Really low interest rate at the moment.
Of coz it has to be done in the most discerning way.
A common theme to comments on this post, and also on the numerous other finance/investment posts, is that holding cash is “dead money”. I disagree. In uncertain times, liquidity (cash) increases your security, and your options. Cash should always be part of a balanced set of investments, and when the risk grows, so should your cash holdings. Traditionally gold is the safe harbour in troubled waters, but for most of us, cash is the far easier option. And yes, cash is not risk-free, but it is pretty safe in Aus. Recently COVID has brought us much uncertainty, but we’ve actually been in risky times for much longer, with indicators like record low interest rates, overly inflated asset prices, global hostilities, the rise of the strongmen (& the drivers for that). Stay safe, this uncertainty has a long way yet to play out.
Selling one of the cars if/when shit happens is the emergency fund for me..lol
I prefer to have money working for me in the interim.About $300,000 home loan, $100,000 offset. So about 3 years of emergency fund from offset. Not really our money but can use for emergency.
@conan2000: Ahhh… I get it! Thank you for explaining that. Good thing to consider absolutely.