Join Josh and Emily to discuss whether $1000 is a big enough emergency fund…and more specifically, how to determine how much of an emergency fund you actually need.
Top takeaways:
- $1000 is a truly arbitrary number. It hasn’t changed in decades and isn’t based on income or expenses.
- In order to determine a good emergency fund benchmark, you have to figure out what your emergency fund should cover (medical bills? Job loss? Home repairs? etc.)
- 3-6 months is common, but that’s a HUGE range.
- All rules of thumb are, by definition, wrong.
- In a true job-loss emergency, the goal should be to keep things status quo, not have to cut everything else.
- “New tires” should not be an emergency–it should be predictable.
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