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Our Emergency Fund: How Much to Save

We were so excited to get to building our emergency fund to our “fully funded emergency fund.” This is also known as Baby Step 3 of Dave Ramsey’s Financial plan. After we became debt free, it was time to begin saving up. But how did we decide what our goal emergency fund is? What is it? Where are we now? I’ll get to that.

Our Emergency Fund (Initial) Target: $10,000

Why $10,000? Well, it is recommened (by the financial plan we are using) to have 3-6 months of expenses saved in case of emergency such as a job loss, house crisis etc. We currently are renters, but want to purchase a home once this emergency fund is established (and after we’ve saved a down payment that is separate). For us, this would primarily be for a job loss, career change, or unexpectedly moving. A month of our bills (we don’t have any debt) plus $500 for groceries/household/other adds up to just under $3000. We decided that since we will be saving for a house down payment that we would save closer to the “3 months.” But since it sounded a little nicer than $9000, we decided on $10,000.

Then We Raised It…

At this time, we are considering moving. It isn’t certin, but we think it’s what we would like. Our current rental is very affordable. It’s dated but has everything we need for an amazing price. Unfortunately, at any place we’ve looked into moving to, the rent for something comparable is double. Eek! So we decided to raise the $10,000 up to $12,000 to compensate for potential higher rent. So in our current place this is more like 4 months expenses, but anywhere else would be 3 months. We are officially HALFWAY to this goal!

Once We Hit Our Emergency Fund Goal:

I’m not positive, but we might switch it to an entirely different bank just so we don’t get tempted with the money (but would still have access to it in case of true emergency). Then, our goals will shift to moving and/or a house. We aren’t even sure yet, but I’ll update once we are.

With Motivation,


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