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Do You Really Need 6 Months of Expenses in Your Emergency Fund?

Kelley C. Long
5 min readApr 9, 2019

When I was going through the classes to become a CFP® professional, we learned all kinds of rules of thumb, including the one you’ve probably heard before, which is that everyone needs three to six months of expenses set aside in order to be considered financially “safe.” A lot of people have called B.S. on this, and I can’t argue with the logic, but I agree we all need some type of emergency savings. Here’s how I see it.

What the emergency fund is for

The emergency fund’s primary purpose is to get you through an unexpected loss of income while causing as little long-term financial damage as possible. It’s also supposed to give you time to adjust to a new reality should you have a permanent change in income status, allowing you to keep paying your bills until you’re able to reduce them through cancellation or adjustment of service, sale of your home or termination of your lease, etc.

What it’s NOT for

It’s NOT really intended to be what you tap for things like non-recurring but necessary expenses like home maintenance, new appliances, veterinarian bills, etc. Those should be worked into your everyday spending plan. The best emergency funds are those that are held in a separate account and remain untouched except in times of true emergencies. And once the emergency has passed, they are brought back up to their necessary amounts to protect against the next thing.

So how much do you really need

Honestly, it totally depends on your personal life situation. Back in the day when I was still figuring out money, I was single, renting a place and had no dependents besides my cat. When I lost my job a year in, it was pretty easy to take my expenses down to just rent and Ramen while I looked for a new job. Worst case scenario, I could’ve paid my other bills on a credit card, then canceled my lease and moved home to my parents until I figured stuff out.

Would that have been desirable? Absolutely not — I was living in Cincinnati and my parents are in Northern Michigan. Blowing up my lease would’ve added to the financial woes and using credit cards to pay bills would’ve extended my debt payoff plan a couple more years down the…

Kelley C. Long

CFP & CPA writing about money & how it fits into life based on my work with everyday people as a financial coach.