We all know it's important to have one. Most of the financial experts recommend between 3-6 months salary in a money market interest savings account ( like ING Direct). That seems like a big goal. We're a family that likes to pay cash for our gently used cars. I did the math last night and 3 months salary plus saving for a car.

Our emergency fund: One months salary
Our goal: Three months salary.
Our plan to get there. ???? My plan was to put the tax refund into it but this year we owed taxes.

What are your thoughts on the emergency fund? Do you think 3-6 months is a good goal? How are you doing on your goal? Any advice on how to build up our (as in all of us) emergency funds?

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Great question! We are in the process of building ours up! We recently cashed in our change jar for vaca- but now we started a new one to have an emergency fund and for a new vehicle (well a new to us vehicle!). Right now we only have 1 months worth of salary. I have also decided that when I use coupons whatever money I saved from using them I will put that in the savings as well (since if I was not thrifty with coupons- I would not have that money anyways!). Doing it this way will make it really hard to get to that amount fast (especially with impending home projects and braces on the horizon)- but it is going to add up over time!

I can't wait to see other peoples ideas on this one!

I think 3 months worth of income is a good goal for most families. Most families don't even have money in a savings account so I think 6 months worth of income is a dream too hard to achieve for most families unfortunately. At least it is in this household, at least until we pay off our debt.

My goal is to achieve the following by the end of the year;
$1000 in savings account (currently have $400)
$1000 in emergency fund

A good tip is to keep your emergency fund at another bank so it's not convenient to access in case you think that new shirt at the mall falls under the emergency fund. Mine is across town.

In your opinion what items fall under the emergency fund category?

I have a notebook and the following categories have their own page: car maintenance, household maintenace (includes appliances, and vacation.

If you know you will need a new roof in acouple years figure about how much it will cost. Divide that out by the number of months and you have the amount you need to save each month.

I do think three months is a good amount to have tucked away. I used this years tax refund to pay off our line of credit ($1,000) that felt really good! Then I put $2,000 in our savings account. We haven't even gotten to one full months bills yet, but we're at least going in the right direction now. This fall my truck will be paid for and I am planning on taking that money and putting it toward paying off my dh's truck, hopefully by spring. Next year we are putting an addition on our house and I want to get as much paid off before that as possible.

We have an emergency fund of $1,000 currently. We are still working on fine tuning our budget. We have additional funds assigned to different uses, for instance, home owners insurance, car insurance, property taxes, etc. We are also working on paying down our debt with the debt snowball first. The next item will be increasing our emergency fund.

We had three tuners in our house for cable. We have gotten rid of two and saved us $10 a month.

We cut back on our car insurance with reducing the amount of insurance we have on one of our vehicles. It is an older car.

We changed our life insurance to term only which reduced our fees.

Those are the ones I can think of right now. I also went to the envelope system for buying groceries!! It totally makes me more accountable. It is amazing!!

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Theresa
Mom of 3 boys and 1 girl

We have a little over $1,000 in a "liquid" emergency fund and about 2 1/2 months expenses in a "less liquid" LOL! real emergency fund. We also have several "funds" (Christmas, heating oil, car expenses, etc.) that have a little money in each of them. We were at about 3 1/2 months in the big emergency fund, but DH was off work for about 3 months last year due to a back injury. We went through all of our smaller funds then and dipped into the big fund, too. We would like to get 6 months in the emergency fund because we have two kids to think of, but boy is it hard! Our paychecks are all earmarked for something because our DS has a lot of medical issues. Currently, our rate of savings isn't as high as we'd like it to be. I recently heard an expert say that they're now recommending 9-12 months in an emergency fund. Wowza! We'd like to get there eventually, but we might have to stop eating

We just used our 3 months savings. Since we've been bringing in about $1500 less than what we need, it took us about 6 months to go through it. Since we still had some income, we didn't have to use a months worth of savings every month. We are hopefully looking at better months, starting next month, so hopefully we can build it back up quickly!!

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www.myspace.com/vioburn

Frugal is being wise with your money and resources and cheap is forcing everyone else to.

Check out my blog, I'm starting to add more to it, as I can...vioburn.blogspot.com

I think 3 months should be the MINIMUM. If you are a single income household (like us) then you should try for as much as possible try to get to 6 months expenses (not income-expenses)! We are working on building ours up!

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

I think that 3 months is a good amount. We are trying to work on building ours up. Whenever we get tax $$ back we put it in then but then that unexpected expense or two comes up, like getting a new garage door, brakes on vehicles, repairing washer. A lot of times it seems like we can never get ahead.

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Mommy to Ariana 8/11/01 & Davis 4/11/05
I love my kiddos!

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Our goal is 3 months and at our current savings rate we will be there in oh another 7 years! Paying off our debt is a bigger goal at the moment still I really want the emergency fund. When we do get our debt paid off (4-5 years) we can concetrate on building this up

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Kimberly Proud Mommy to Bethany Rose April 2006