My Emergency Fund is finally 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.