Monday, April 9, 2012
How Big is Your Emergency Fund?
Then that made me wonder if I was miscalculating my living expenses. I based my savings on the major expenses--shelter, groceries, cell phone, etc. and I didn't really take into account the life expenses like going to a movie or going out for a bagel with a friend. Certainly, I could have spent less money while I was unemployed, but I was so incredibly bored and miserable that I needed to just get out of the house, even though getting out of the house seemed to always cost something. It seems ludicrous to imagine being unemployed for more than a few months, but these days, it's a real thing. Also, there's the fact that even if you find work, it may be a minimum wage job that doesn't pay all the bills and the emergency fund has to supplement.
This is all very depressing, but I guess my point is that if this is a fund that is truly for an emergency, how do you know what an emergency is going to cost? So, I'm honestly curious, how much do you put in your emergency fund? Do you base it on a dollar amount, a number of month's living expenses or something else? I settled on $10,000 because it's a nice round number, and should carry me through 8-10 months of life expenses, depending on how frugal I am.