I can’t remember where I saw it, but someone recently said they “only” had $1,000 in their Emergency Fund. The first thing I thought when I read that was, GREAT!!! Do you know how many people don’t even have a dollar in their emergency funds? Or even know what an e. fund is? A lot. And even scarier is that many of them are living paycheck to paycheck :(
So if you’ve got it, flaunt it! Oh wait, that’s not right. (Get outta my head Tyra!) Let’s try that again…
So if you’ve got $1,000, or even $500, in your emergency fund, be proud! You’re consciously working towards a stress-free and financially safe future. That’s $1,000 MORE money you can count on in an event of a crazy situation or “emergency!” – whatever that means to you. It may not be as much as you’d like, but you’re on it and you’re getting closer. One day at a time, my friends.
I can vividly remember hitting $1k myself, and I never thought I’d make it ;) It’s like one of those mental blocks to get across, ya know? Multi-millionaires recognize this too – only for them it’s always the first MILLION that was the hardest to reach, haha… hopefully one day I’ll be able to verify that myself.
Regardless of that big number you’re trying to reach though, keep on pushin’. Personal finance is a myriad of first steps and motivation, and without one or the other you’re not going very far. So you take that $1k and you smile and tell yourself next year it’ll be $3k or $5k or even $50k! And then you plan for it and make that $hit happen.
Why? Because you’re a financial rock star, that’s why. And if you’re not going to do it, no one else will.
P.S. I originally wrote this post 5 years ago… Still as timeless as our 1875 book on Thrift!
[Drawing cred: Mike Tungate]
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Love this, great point. It’s important to be proud of that first step, because the first one is often the hardest!
You know it! Once the ball gets rolling it’s just a matter of using time to your advantage :)
Yep. Once you’ve taken that first step, you’ve started to create the habit of conscious saving, spending, planning, etc- all the keys to successful PF.
I actually keep two. A true Emergency fund that will cover 6 months of expenses and still be comfortable and another fund that is the 1000.
Em fund is for loss of job, loss of health etc while the 1k is for the “windshield” broke today or the kids glasses “snapped in half”.
With that being said, no matter how you do it, start saving now and have some $ stashed somewhere that you can get to easily in case of an emergency.
Hey, whatever works right? I guess technically I have two as well – one major one for the same reasons you noted above, as well as an extra $1,000 in padding in our checking account. So we don’t bounce anything and always feel flush :)
That’s a super smart idea. I love it.
Having an emergency fund has given me a little peace of mind. I just wish I could find an “OK, that’s enough” feeling. Does anyone else have this problem? Like, when is enough…enough?
Of course! It’s a really hard one to figure out, and it goes with earning more/building net worth/etc etc too. Like there’s always that next step you can reach for, you know? But I’d much rather have it that way than the reverse and be lazy/clueless ;) I think maybe over time as our lives and priorities change it’ll get better? I know that setting hard number goals help usually, but yeah – we feel your pain.
We have 3 months. I keep telling myself that it’s probably too much, especially considering that you generally don’t need the EF all at once. Since my work changed their health insurance, I’ve been even more wary to move the funds around. We now have a max out of pocket of 5k for family (before we only had co-pays) and have individual deductibles too. I know someone who hit her maxes on 15Jan since she slipped and fell.
The extra $$$ gives us peace of mind even though it doesn’t get us any closer to having our house down payment fund where we want it! Can’t have my cake and eat it too though…
Exactly. Better to have more in there than less if you ask me. And the beauty of it all is that you just leave it alone and top off the other categories as time goes on since you’re now “done” with it, ya know? Until an emergency pops up?
So true, I worry more about the direction I’m heading than exactly what point I’m at right now. Same with exercise, relationships, and business.
I think 1K is a great “starter” emergency fund. There was a time in my life when I would’ve loved to have 1K stashed away =)
My eFund is currently sitting around $1300 with a small addition every month. Sometimes it feels inadequate when I see others with rockstar eFund balances. But then I remember, this is my eFund and my journey. I do think its funny that comparing eFund balances can be like Keeping up with the PF Joneses.
“This is my eFund and my journey.” – Preach!
I have the overarching problem here as well. I don’t often enough take a look at where I am financially and appreciate it. I am usually looking at getting to the next milestone and charging full steam ahead. I (and a lot of the people here) have a lot to be proud of. Thanks J!
We definitely get sucked into our own little worlds, don’t we? Gotta come up for air every now and then and look around at all the beauty :)
Anything is definitely better than nothing! I find it so much nicer to have the cash to fall back on when needed, rather than a credit card.
Thanks for the pick me up! I’m getting married in 4 months and right now most of our “savings” is actually just “spendings” that haven’t gone out the door yet. But I have set aside $1,000 in emergency money that the wedding can’t touch. It’s not much, but at least it’s something so that we don’t have the cancel the whole wedding if the car breaks down or something. It’s nice to hear that that $1k is worth being proud of.
Not much??? You better re-read this post again. Or better yet print it off and stick it to your fridge :) (Also: congratulation on the engagement/wedding! What should I wear to it?)
I’m still trying to hit 6 months worth of paychecks… I don’t think I’ll hit it this year, but It’s more than 1 month!
Heck yeah it is, brotha. An incredible goal to hit too – make sure to let me know when you reach it so I can send you an e-beer :)
An e-fund is such a stress reliever. We should consider changing it’s name to the peace of mind fund. :)
I like it! And, for some reason, when you wrote out e-fund like that I automatically thought of it as an “electronic” fund, haha… Which, these days I guess it is too, eh?
I stopped gaining momentum when I stopped targeting a number. Funny how quick it was to achieve my Emergency Fund goal when I was working with a goal number!
With more things in life than just money too!
I love having an emergency fund, I can’t believe it took me 28 years to get one. I honestly do worry less and sleep better. When the pipes in our house froze this winter and I was expecting to need to call a plumber in to fix it (thankfully a hairdryer, a husband and a lot of time was enough) I was fine knowing we had a little cash set aside to do so. We have enough to cover any insurance deductible which is enough for us right now. Once we`re debt free I will increase it a little (just a few thousand) since we live in canada we realistically won`t have any huge major emergency that wouldn`t be covered by 1) our heathcare, 2) our private insurances (from health to home). Emergency funds, as I have written a post on, are very much not a ”one size fits all”.
Ah yes, universal healthcare… A rare unicorn on this side of the border! :)
I remember that feeling when I saved $1K.. then that feeling when $5K… When I reached $10K I was thinking when I was barely able to save $100. Great feeling ever! This is a great post. Thank you!
When we decided to pay off our debt, we followed Dave Ramsey’s advice and kept just $1,000 in our emergency fund. It was a little nerve-wracking because I like to have more than that in savings, but in the year it took us to pay off our loans, we didn’t have to touch it once. Now we are close to having three months saved up, which is our goal for now. This month will be the first month we’ve had to use any of it in quite some time — $600 in unexpected car repairs, and we couldn’t absorb all the cost with our regular income.
I totally agree, something is better than nothing! I know a lot of people who would be totally screwed in an emergency if not for credit cards. I don’t like using my emergency fund, but it’s a heck of a lot better than stressing about where the money will come from when the emergency has made me feel bad enough.
Exactly! We all start somewhere! I haven’t stressed too much about the emergency fund. (We had 5000 in it until recently). It didn’t bother me because we also had thousands in a “car” fund and a couple thousand in a “vacation” fund. I figured that if an emergency (such as job loss) happened, I’d end up taking out of the car or vacation fund if needed. But then I bought a car and cleared out that car fund, and that got me scared into trying to increase my e-fund – I’ve just been adding $500 here and there.
That’s true though – the more funds you have piling up the more options you have in case of the dreaded emergencies. Well, until they’re spent like you just mentioned ;) You guys seem to be doing a fantastic job though, so well done!
I find that I sometimes become too hard on myself thinking I should have this or that saved, but then I talk to some friends and realize that we are on our own path, and that actually I have a lot saved in comparison, and I’m doing OK! It’s important to celebrate the small financial victories in your life!
Good advice. Energy flows where attention goes. As Oprah says, “Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.”
I actually like your quote better! “Energy flows where attention goes” – much more catchy ;)
Agreed, I know many people discount having an emergency fund at all, but honestly, if it gives you peace of mind, it’s worth the tradeoff of not having that money tied up somewhere else.
I LOVE emergency funds! It gives me comfort and peace of mind knowing that if I lost my 9-5 job today that I wouldn’t have a mental breakdown worrying about how I would pay rent and buy food over the next few months. The thought of not having at least some sort of back up cash, even if “only” 1K starts to stress me out big time–I don’t know how people do it. I would rather be super hardcore frugal for awhile to build up a small efund then continue on with the stress of the paycheck to paycheck life. I know that sometimes there are things out of our control that can be financially devastating. I like to focus on what we can control :) I try to give gentle hints to others that I know have zero in an efund, in an effort to encourage them to start saving and reaping some of those feel good benefits ASAP. We can all use a little less stress and worry in our modern lives!!
Please tell me you pronounce your name like the old rapper’s delight, Cristal? :)
I agree so much to this. My emergency fund is not that great but I’m so proud of the progress I have made. It might not be full yet but it is a lot more than I had last year, which was nothing. It helps me sleep at night to know that if some financial emergency comes, I’ll be ready.
Emergency funds are great.
I just love when I see ANY money in a client’s emergency fund. There are so few people who don’t even have that much. The most important thing is starting the process and committing to building it.
Spot on J! I remember when I first hit $1k and it felt like I never would, but when I did it was awesome and ready to hit the next target. I think we can easily get tripped up by the amount you have at times, but so many don’t have a clue as to why they should have one or are getting by with little that something is definitely better than nothing!
I still give us a hard time because we “only” have $33,000 in our emergency funds. We have one true Emergency Fund, and we have one account that is just padding for our biweekly paychecks in case we don’t bring in enough in a certain month.
I think that once you start saving, your mind defines success differently.
For sure. Same with getting raises in your career, or growing your businesses, etc etc. Hopefully this get you to stop for a hot second and at least pat yourself on the back :)
Classic post with the nail struck square and true!
The worst thing about paycheck-to-paycheck living is the stress of it all. The first thousand bucks put away for a safety net is the best money anyone ever saves.
I now have two, one that I use specifically for property taxes and homeowners and auto insurance, which is funded by automatic transfers from my paychecks and is exactly enough to pay those bills when they come due, and a second one to cover monthly expenses (less investments, savings, etc.) should I become unemployed. I fund the second one with “extra” money like unexpected refunds, gift checks, dividends and interest, etc., so it’s growing very slowly, but it is growing!
A brief few months ago I had no emergency fund, so I consider this progress!
Pretty sexy setup if you ask me. And I know you’re asking me ;)
The wife and I don’t keep a specific “emergency” fund but have about 12 months worth of living expenses in investments that we could access within 3 days if needed. We also like to keep close to 1 months worth of expenses in our bank account but most of the time, its probably half that amount. For those who follow Dave Ramsey, this is one of the places where I have a slightly different take. If you have only 1K or 2 months worth of expenses saved off, then yes, it needs to be in an account that is super safe and secure and easy to access. But if you have a significant amount 6 month or more, then I do not see the problem in having it in an investment account that is properly diversified.
Yeah, *where* the money’s at can def. be left to personal choice and benefits, but luckily when you get to that level it’s a good problem to have :)
Yeah, when I was paying off my student loan I didn’t have much to put in an e-fund. But I eventually saved $1,000 because my goals kept getting derailed by small financial setbacks. It was a small amount, but it helped!
I need to up my emergency fund game. It’s currently really lame. such a shame!
If you have anything in it at all, you better re-read this post! Gotta be proud, baby! ;)
Yea nothing to be proud about yet. It’s got £20 in it.
Well, if you promise to never touch that £20 until emergency time, you still get a pat on the back from me :) You xfer it out and we’re no longer friends.
$1,000 will protect you from 90% of emergencies. $1k is certainly nothing to sneeze at!
Emergency funds are great! They really make the downs feel that much more cushioned. If only everyone had them, life would that much of an easier ride…
I picked a banking plan that once I maintain $1500 at all times in the month then my banking/transactions fees are waived. So that $1500 acts like a buffer/mini E-Fund. My real E-Fund had a starting goal of $10K which I reached. I feel a lot better now if crap decides to hit the fan. Good post!
Thanks! And great idea with that $1,500 route! Even though it sucks to have to pay if it was lower though? Good for motivation :)
I have a decent sized emergency fund. Remember, when you reach FI, all you have is the emergency fund, and it has to last the rest of your life. Unless you have some side hustle money.
My EF is only $1500 at the moment (used to be 10k but with so much debt it wasn’t really smart), but it does make me feel good at night!
Honestly, I didn’t even know what is an emergency fund until I start reading a personal finance blogs. Right now, I’m still building my emergency fund and hope it would grow every month.
Gotta start sometime :)
It’s true. People have to pat themselves on the back for progress. You may not be where you’re suppose to be but you’re not where you used to be. Right? : )
Hah! Righto indeed, my good lady.
I definitely have a low balance in my EF to my standards. That being said, you’re right – I should be proud that I have an emergency fund in the first place!
Got my EF from $0 to $10K in a year and my next stop is $12,000. I feel that I have too much in my EF but I love being able to save money.
Awesome! You can never go wrong with having “too much” money :) You can always spend it at any point whereas the opposite isn’t true.