Should Your Job Dictate Your Emergency Fund?


An emergency fund is money that is set aside in case of emergency. It’s there for you when you need it for an unexpected expense, to prevent you from dipping into a credit card or a line of credit and ending up in debt.

Emergency funds come in all shapes and sizes. Some people, like myself, have a baby personal savings plan, because they are spending most of their money paying off their debt or saving for something. Others have a much larger emergency fund.

Common wisdom (aka: Google) says that you should have three to six months of expenses saved in your emergency fund. What I’m wondering is, does that amount work for everyone?

Steady Job, Baby Emergency Fund

As I mentioned above, I have a baby emergency fund. I’m doing this while I’m paying off my debt, because I hate the idea of large amounts of cash languishing in a savings account while I’m accruing interest on my loans.

I’m comfortable with this amount because my job is fairly stable, and I don’t anticipate being laid off in the near future. In my case, my emergency fund is meant to cover emergency expenses, not job loss.

Of course, ideally, I’d love to have three to six months of living expenses in my account, but that goal will have to wait until after I pay my debt off. I say that my job is stable, but no job is ever truly stable. Due to this, having several months of living expenses squirrelled away would be good insurance incase the worst happens.


Self Employment, Large Emergency Fund

My husband, on the other hand, is an entirely different story. He is self employed, so his income is fairly erratic. Some weeks he makes several thousand, other weeks he makes several hundred.

Due to this, he has his own personal emergency fund that covers several months of his expenses. He is fortunate that he rarely has to tap his emergency fund, but in the off chance that work dried up for a few months, he wouldn’t have to worry about making ends meet.

His ideal emergency fund would contain a year of expenses, so that he could truly feel comfortable with his self employment.

A Balanced Emergency Fund

While my husband and I have mostly combined finances at this point, our need for different emergency funds has kept that aspect of our money management separate. Once my remaining $4,500 in debt is paid off, I plan on combining our emergency funds and working towards having six months or more of our household living expenses covered by the fund.

This way we’ll be ready for every possible scenario: Unexpected expenses, my job loss, or his self employment income decreasing.

Having an emergency fund can be a great way to insulate yourself from life’s curve balls. They aren’t one size fits all, and having a more or less stable job should play a role in deciding how large your emergency fund should be.

How big is your emergency fund? Do you have a baby emergency fund like me, or several months of expenses put away like my husband?

#Budget #Career

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