Is a 12 Month Emergency Fund Too Much?!

Is a 12 Month Emergency Fund Too Much?!

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[michaelalberts]

Good advice! I started a small business twenty years ago with best-case, anticipated results, and worst-case cash flow scenarios calculated. After 12 months I was very glad that I had an additional 12 months cash in reserve to lick my wounds and regroup.

[AnnaSzabo]

I’m $120, 000 in debt. I used my emergency fund to pay off all credit cards and my 2020 Camry.

Now, I’m attacking the student loan but don’t have an emergency fund, so I’m scared. Very scared!

[GruncleJohn]

You’re right. It took me a whole year to get a full time in a professional position. I was broke to start with.

[saulgoodman]

They need a YouTube moderator. Lots of spam comments.
I'll charge 5k a month for that service.

[saulgoodman]

No, it's not too much.
The pandemic showed that 3-6 months is not enough. Not when the government shut down business. But only small businesses, they let multi million dollar businesses stay open.

[missgui]

I would put half of that in a year CD.

[domdrty]

I would probably say you also need 6 to 12 months of liquidity to run the business with no income. Especially if you have employees that depend on you.

[joeolgin]

Can you just put the emergence fund in a CD? Then you get a little higher interest and the only penalty for early withdraw in loss of interest

[techihandle]

I keep 5 years emergency fund parked in liquid fund, short term debts. I have very high confidence on investing market due to this for long term.

[OnCashFlow]

It's not too much, but of course it's not optimal. Once you achieve a good amount of wealth relative to your spending then an emergency fund is less important than when you have little wealth relative to spending

[ccb]

Who's making only 0.5% in high-interest savings accounts these days?

[shaereub]

I keep 3 months in ibonds, 3 months in a HYSA, and am building another 3-6 months in a 50/50 stock/bond ETFs taxable account.

[sukhvindertiwana]

If financial dependency is on one person and that person gets cancer then is 6 months emergency fund really enough?

[sandrasmith]

12 month emergency fund is not too much

[appleztooranges]

I save 3 years emergency. But consider it sinking funds too

[BrandonMinguez]

The financial stability of your home may need that readily accessible cash one day. Most Americans don’t even have an emergency fund!

[mychaelhouck]

Are we assuming that this is take home pay? This was what always confused me. I've currently got 6 months take home pay in my savings account, and just received a raise. Obviously, I should increase my fund?

[edhcb]

People that actually have 12 month emergency funds are rarely the ones that need them. 🤔

[roburb]

How about a person with a pension, specifically a military pension, and a wide who is a federal employee for the past 10 years who will also have a pension. Is the EF strictly to cover your expenses? With my retirement and her current Federal job, we will never have less than a $175K annual income. My pension covers 100% of our monthly expenses, I.e., mortgage, 2 cars, son's private school, utilities, phone, etc. And, still some left over.

Do I really need an emergency fund? Her job is 99% secure, basically 100% but I don't ever say 100%. Our mortgage is fixed at 2.25% for 30 years. My property tax is reduced 90% because I'm a disabled veteran. I also work, 6 figure income and it's fairly stable until August 2024.

I don't currently have one, haven't had one since I retired.