Give Me Back My Five Bucks

My Emergency Fund is finally at $5,000

It has taken almost five years, but for the first time EVER, my Emergency Fund is fully funded at $5,000.

For long-time readers, you know that I’ve suffered major setbacks in trying to get to this $5,000 mark, such as being unemployed for nearly 3 months (and having E.I. take 11 weeks to get me my first payout!), ending a 1-year contract,  crashing and totaling a car (whoops), and let’s not forget last year when I found that my job was posted on Craigslist behind my back.

This number is meant to represent one of the following scenarios, based on having zero income:

  • 3.5 months of comfortable living, based on my current budget
  • 5 months of bare-bones living, based on my current budget
  • 2 months of comfortable living, based on paying rent/mortgage and my current budget
  • 3 months of bare-bones living, based on paying rent/mortgage

Those numbers aside, the best part about how my income is structured, is that my FT job only represents 70% of my overall income. My PT job and freelance/blog income brings in the other 30%. So that means, if I should lose my PT job and freelance/blog income, I will still be able to get by with the income from my FT job quite comfortably. This means, I wouldn’t need to touch my Emergency Fund, and I’d still be able to save money too.

Now, if I lost my FT job for some reason, I’d still have 30% of my income coming in. And I can imagine that if I had all of my time to dedicate to my PT job and freelancing/blogging, I could increase my income through those channels. By how much, I’m not sure. But considering I bring in over $2,000 a month in PT/freelance/blog income right now, if I lost my FT job, I don’t think I’d need to take much money out of my Emergency Fund each month – if at all.

Crunching these numbers makes me feel at least a little secure with the amount I have in my Emergency Fund account. This is just a base amount for me, because I know that in the big picture, $5,000 isn’t going to be enough to get me through a long-term emergency. It is, however, a humongous step towards my goal of becoming financially independent.

Going forward, my long-term goal is to have $10,000 set aside in my Emergency Fund. I have come to this amount based on the above numbers, the cost of a mortgage, future children, and other variable factors – like my employability factor, drive to make money, multiple streams of income, etc. For larger household emergencies – like costly repairs – I also have a general Savings Fund that I can dip into, should my EF not be enough to cover the cost.

My plan of attack is to now set aside $50/bi-weekly towards my new goal of $10,000.

How much would you need in your Emergency Fund in order to feel comfortable?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. That's awesome! Having different sources of income is so important, especially considering the fact that no job is stable. This is also my goal for the year – to have income from different streams.

    It's funny that you wrote about emergency funds because I was thinking about my emergency fund dilemma. I currently 5 months of comfortable living expenses (about $15K). I also have a huge debt and despite interest charges, I find myself reluctant to use my emergency savings (even a little bit) to pay off my debt.

    Being self-employed, having a 5-month emergency fund is what I find comfortable. I'm currently trying to decide if I should use some of it to pay off my debt instead.
    My recent post How I Started My Business with 1-015

    • Lindsay says:

      Pay off your debt, as much as possible, right now. Leave a bit of a cushion for yourself, but paying interest on your "huge debt" makes no sense.

  2. Congratulations! That's great news and inspirational. Since I only recently started this debt repayment journey, I'd be comfortable with a $1000-$3000 emergency savings to get me started. Once I payoff the credit card debt, I would like to get somewhere between $5000-$10000 for emergencies. Keep up the good work :-)
    My recent post 99 cent store anyone

  3. Congratulations! What a great feeling it is to have reached a goal!! Sounds like you have a great plan in place to get to your next milestone.
    My recent post Well its That Day again!

  4. CAin says:

    Good for you. It feels really good to take charge of life and start living it on your own terms!

    I'm self employed and income can vary from year to year. Sometimes it is just around break-even on expenses and sometimes I can bank a very large bonus. It depends on a lot of factors that aren't always 100% in my control. Of course I work hard to skew the odds in my favor! As I also have a family and responsibilities, it feels good with around $40k in cash. That's 12 months average expenses.

  5. Kate says:

    I feel most comfortable at 20k. It's been at that level for a while now, with regular monthly contributions, but it's inching closer to 25 right now. The plan is to take the "extra" 5k as it comes along (assuming the EF doesn't need to be tapped for actual emergency) and put it on to our mortgage as a pre-payment.

  6. gmbmfb says:

    That's awesome being able to have $40k in cash on hand! Good job! I know I wouldn't feel comfortable without at least that amount if I were completely self-employed.

  7. byrocat says:

    Congratulations on reaching a very important goal! One quick question: Since this is a fairly serious chunk of change — is it sitting idle in a bank account or is it invested in something that allows you to get it out and still pays you more than the bank does on a savings account? One idea might be to split it into two components — one is immediate access and the other takes a week or two to access.

  8. gmbmfb says:

    Right now, it's sitting in a savings account. I think once I get up to $10k, I will feel more comfortable investing half of it into something that will earn me more than the 1.5% interest I'm making. But as of right now, having $5k immediately on hand makes me feel better than having some of it inaccessible for a period of time.

  9. The Girl Next Door says:

    Wow, congratulations! I don't even know how much I would need. I would just want to keep going and going. I can't even imagine how great having that much saved must feel!

  10. gmbmfb says:

    Where do you keep that $20k? In a savings account, or an investment of some sort?

    • Kate says:

      RBC e-Savings. It's not a great interest rate but we really need it to be liquid. We've been caught with super-short work-related international moves a few times (2 days being the record, but 2 weeks being more common), and we need to be able to pull the money out quickly to pay movers, buy plane tickets, float the house for a month or two until we can get it rented, etc.

  11. Austin says:

    Congrats! It is a good feeling, eh? My wife and I just hit our E-Fund goal of $12,500 which is about 4 months of pretty bare-bones expenses. Once we get into a house next year, I can see us re-evaluating and probably bumping it up to 15-17K. We opened a "high-yield" savings account which yields 1%. Whoopee!

    My recent post Review- FNBO Direct Online Savings Account

  12. thewanderingbudget says:

    Congrats! I'm currently at $1,000 in my e-fund while I get out of credit card debt. I'm hoping to get to $3,000 by the end of the year, and ultimately I have $10,000 in mind. I feel relatively comfortable in my job with the federal government, but being that my fiance is from Australia I want to always have enough money set aside that we can fly there (or back to Canada if we're abroad) if there's an emergency. Realistically I'm realizing that I should be one of those people with a huge e-fund, to cover this as well as any other life emergencies. For now I'll leave my goals at attainable levels :)

  13. psychsarah says:

    I'm aiming for about $25,000 which would be about 5 months of semi-comfortable living for my family (not bare bones, but not our current spending). I'm currently just over $5000, so I know this will take a while, but I'm currently putting about $300/month, so it's growing bit by bit. Putting significant money aside for savings (we save a good chunk for retirement too) means that if push came to shove, we could stop all those automatic amounts, and make the money stretch longer. Even though it's not where I'd like it to be to feel totally comfortable, it is a good feeling knowing that we'd be okay if for some reason a paycheque didn't come in on time. It's certainly miles from where we were a few years ago! Yeah for progress!

  14. A. Marigold says:

    Congrats! My emergency fund goals are embarrassing: I think I need at least $25K in an emergency fund. That would be 5 months of living at our current level (which is fairly minimal already) plus continuing to service our student loan debt (which, with two expensive doctorates, is substantial). Like psychsarah, we're at about $5,000 and saving $200-300 per month in the emergency account. If a true emergency occurred (which would entail me losing my job AND my husband being unable to work–he is self-employed so unless he lost every single client, his income wouldn't reach zero, or some more ghastly scenario that I don't want to think about), we could suspend debt payments and live with family, so that would stretch the $25K further.

  15. Congratulations on reaching your $5,000 goal! That is awesome that you are going to move on to your next goal of a $10,000 emergency fund and not just be satisfied with your $5,000.

    I would feel most comfortable with an emergency fund of about $7,500. I find it's hard to balance saving for an emergency fund and for a down payment at the same time.
    My recent post March 2011 Blog Statistics

    • gmbmfb says:

      Totally agree. It's been a long, long process trying to save for an Emergency Fund AND a down payment over the past 5 years. Consequently, neither is at the level I'd like it to be at, but both are satisfactory amounts at least.

  16. Jenn says:

    Congrats! I know how it feels – with my next paycheck, I'll hit my EF goal of $20k! That's about 10 months basic living, could possibly be stretched to a year if things were desperate.
    To be fair, to reach this amount, I've not started a home down payment fund (though I have saved for retirement concurrently). For me, the EF was priority 1. I'm not settled in my career or where I want to live, so a home fund is less pressing.

  17. Momma Star says:

    Congrats!! do continue with the great progress..
    My recent post Vacation

  18. eemusings says:

    I've got $10k for two, but I definitely feel like more is never enough. Next up is travel savings, then wedding and down payment!
    My recent post Scammy scum

  19. wow! congrats on getting your emergency savings to your goal. I have almost the exact same goals as you have on your sticky note in your banner. way to go!
    My recent post How to Start a Business

  20. Stephanie says:

    Honestly, I never feel like I have enough money in my emergency fund. I still auto-transfer money into it every month, but I don't have a cap on how much it will have. I suppose I could transfer some of my E-fund into my House Fund…or use some of the excess savings to pay down my student loan debt.

    But hooray! Congrats on hitting your goal! And I guess you could just say you have a pretty complete contingency plan. That is, between the emergency fund, and your alternate income streams, you've got some security regardless of what happens.
    My recent post How much would you spend on an engagement ring

  21. Yay! Congrats!

    I set myself at 20K for my Emergency Fund. I should be about 3/4 there by the end of the year. It represents household expenses for 8 months for my entire household expenses. I personally feel it should be more but it'll be "good enough" as I don't plan on touching it so the interest can accumulate over the years. Eventually, I'd like to see it up to about $30-35K though.
    My recent post Loving Igigis Spring Collection!

  22. munchkin says:

    you are doing excelling Krystal! My goal is $3000 based on my current budget and im only about $500 away from it, so that feels great!
    My recent post Life as a Scholar Again

  23. Erica says:

    congrats on reaching your $5,000 goal. Currently I have no emergency fund basically because I live at home, so if something where to happen to me I know I have my parents to fall back on. In the near future I plan to set up an emergency fund, but its just not something I feel I need right now.

  24. Fig says:

    That's great! Congrats on reaching your goal! Right now my EF is next to empty after a couple of emergencies in the last few months. I'm hoping to build it back up asap!
    My recent post The Importance Of Saving For Retirement

  25. Congrats on finally reaching your goal! :-) My EF is currently at $5000, but I'm trying to get it to $6000 (3 month's basic expenses) which should be in about 3 weeks! Yay! :-) After that, I'll drip-feed into it while saving for other goals, and hopefully reach an amount to cover 6 months, then 12 months (but that's a LONG way off!)

    • gmbmfb says:

      That's awesome! Good job on your EF savings. Maybe one day I too will get to 12 months of expenses, but that's a long way off for me too. :)

  26. John says:

    Well done! I wouldn’t be too hard on yourself for the setbacks that you have faced as this is exactly what an emergency fund is for! Imagine these times with no emergency fund in place at all – a horrible place to be.

    As important as an emergency fund is the skill of not allowing your hard earned (and saved) capital depreciating in value; I would suggest 3 months living costs as an emergency fund before then looking at alternative ways of investing your money.

    Financial adviser by trade (in the UK) – but not currently practicing.

  27. Kay says:

    Congrats Krystal on reaching your first goal for EF.

    I have a question out of curiosity – I notice you put x amount in EF, y amount in Travel Fund, z amount in Downpayment Fund. Wouldn't these funds get fill up if you put all spare amount to EF, fill it. Then move on to Travel fund – fill it and then move on to the next one? Say, if I were to do it, the first idea that would occur to me is fill one and move on to the next one.

    I understand that different strokes work for different folks. But I'm really curious if there's some reasoning that I am overlooking behind this kind of savings strategy.
    My recent post The end in sight

  28. Dan B says:

    Do you have any debt Krystal? Just wondering how you justify having $5,000 sitting in a chequing/saving fund while you still pay student debt/mortgage. Just curious!

    • gmbmfb says:

      I paid off my student loans years ago, and have no credit card debt either. The only debt I have is a car loan, which is sitting at 0% interest.

      And even if I had a mortgage, I would always keep cash set aside in case of emergencies, and for general savings. Sure, I will pay more than the minimum payments into a mortgage, but having all of my cash flow tied up in property doesn't really seem like a great idea if I had to deal with an emergency. How would I pay that mortgage?

  29. SS4BC says:

    Wee! That's so exciting you finally got there!!! Congrats Krystal!

  30. Makky's Mom says:

    I will be happy when we have about $25,000 in our EFund (currently have $7300). $25,000 would be about 4 months of expenses to use in the event of job loss.
    On top of that I would like to have a minimum of $5000 in a House Emergency Maintenance Fund AND another $5000 in a Life Emergency Expenses Fund to cover surprise expenses that don't fall under job loss or house emergencies.
    So, all together, a cushion of $35,000 would make me feel secure.

  31. So Over Debt says:

    My e-fund currently sits at a little over $1000 with a current goal of $5000. I'd love to get to $30k at some point in my life – that's equivalent to my annual take-home pay right now. It would be amazing to know I could survive for a year with no income if I absolutely had to!
    My recent post Financially Responsible 5 Great Reasons You Should Be

  32. frugalforties says:

    Congrats! I am still working towards my $2000 goal – and after that I'll be aiming for $10k.

    @Dan. How can you justify NOT having an emergency fund, no matter what kind of debt you have? If something happens in your life, how do you plan to pay for it?
    My recent post Paying Student Loans vs Saving For Retirement

    • gmbmfb says:

      Agreed. Even when I was $20k in debt, I still had an Emergency Fund. Granted, I was only contributing about $25/pay cheque, but that little bit of cushion ensured that I didn't go into MORE debt should an emergency arise during my debt-free process.

  33. centstosave says:

    I need to start working harder on increasing my emergency saving fund! You did an awesome job!
    My recent post Happy Saturday!

    • Rosalba says:

      I had even more debt than that after college. I have been fwololing Dave Ramsey’s plan. It has been a godsend. I recommend it highly. He says to save $ 1000 for a beginner emergency fund, then pay off your debts, then save up enough to have 3-6months of expenses for a full emergency fund. He has a great book out (that just released a new addition) called The Total Money Makeover .

  34. Country Girl says:

    Congrats on getting to 5k! Sounds like you've got a solid 'just in-case' plan, in addition to your side income. I recently bumped up my emergency savings goal as well to 9k – which will provide me a better cushion should anything happen. Like you, my previous goal was 5k, but with a new job and everything, it wasn't really that recommended 3 months of income.
    My recent post Wishing and Dreaming

  35. Kay says:

    ok, that makes sense. living your life and not putting it on hold while on the way to be financially stable.
    My recent post The end in sight

  36. Kelly says:

    I'm at just over the $20,000 mark and counting. I'm pretty confident that this would take me into 6 months of living decently (not being extravagant but not eating Kraft dinner either).

  37. Nate says:

    You only need $1000 a month to live on and pay all your expenses? Do you live with your parents or something? Is this 1975?

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