Emergency Savings for Low-Risk Living

Emergency Savings for Low-Risk Living

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Safety Cushion

The purpose of an emergency fund is to have a cushion while paying down debt. This way, if an emergency comes up, you have cash instead of putting it on your credit card and accumulating more debt.

Unfortunately, many arbitrary numbers get thrown around when concerning the amount of money to have in your emergency savings. Some experts suggest 6 months of living expenses, others say less, some others even say more! Remember, this savings is supposed to take priority over your debt repayment.

Risk-Assessment

Before listening to these numbers, it’s best to do a risk-assessment of your own living situation.

Let’s be real here, what expensive risks do I have?

  • Without a car, I don’t have to worry about spending an unplanned $500+ on repairs
  • By renting, my landlord is responsible for all repairs & appliance replacements
  • Health emergencies are still a factor and could cost me, but I do have decent health insurance
  • Losing my job in this economy is a possibility, but I would likely qualify for temporary government assistance


At the end of the day, not owning a car or house eliminates a lot of possibilities for emergencies in my life.

While I still have debts, I don’t see a reason to have an excessive emergency fund. As long as I can cover rent for two months, which rounds up to $3K, I don’t feel the need to have much more than this in my savings. I would rather put this extra money into my debt repayments.

What is your strategy for emergency savings? Leave your comment below.

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5 Replies to “Emergency Savings for Low-Risk Living”

  1. I don’t have any EF right now. Yes, I know, shame on me and believe me, it’s not something I like. I’ll start my regular job soon and one of my main goals is to build and keep at least small EF (I thought about 1000chf to start with). I believe small is always better than nothing and it’ll give my some peace of mind and more motivation to keep it going. But, as you said, there are “arbitrary numbers” and sometimes they’re so… confusing ;)

    1. For me, it’s really peace of mind more than anything. Being able to pay rent is my biggest priority so knowing that I can do that in a worst-case-scenario makes me feel better, in general. Anything more than that though isn’t really necessary for many situations. You’re right though, a little something is better than nothing.

  2. I never know how much I am supposed to have saved, either. Like you, no house, good health insurance, and no car — but I have never been good at maintaining an emergency fund when I know I have debt incurring interest. I am happy to report, though, that for the first time since I was probably 18 and headed off to college, I have $1,000 in a savings account! :) Woot! I am aiming to add to it aggressively until I get to $2,500, and then throw maybe like $100 in it per month for awhile while I tackle more debt. Great post.

    1. Thanks for sharing! I always get bummed out when I hear from people my age/younger who have $10-30K+ in their savings, so it helps me to stop and do a reality check. Will I realistically have an emergency right now where I will need $30K? Highly unlikely. Good luck with your savings goals, every little bit counts!

  3. I don’t like to have too much cash on hands, and to me an emergency fund is lost money when you have high interest debt. My emergency fund = my credit card and overdraft limit, I’d rather pay off the debt and charge the emergency if it ever happens.

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