What should you include in an emergency fund?

A lot of people go with the general rule that you should have an emergency fund of at least 3 months and preferably 6 months of living costs. I take mine a step further and break it down so that other specific emergencies are covered with extra cash. Here is my list of what I have reserves for in my emergency fund:

  1. 6 Months (12 if self employed) of living expenses. I can pay my bare bones, needed to live bills for 6 months without earning a single dollar.
  2. 50% of ALL insurance deductibles. I chose 50% as it is unlikely you will need all deductibles at the same time. This includes homeowners, car, health, dental, and any other insurance that has a deductible. Surprises will be covered here!
  3. $500 car repair fund. Up this to $1,000 if your car is 7+ years old. This will cover any unexpected repair that may be needed. Accidents are covered by insurance and deductible fund above.
  4. $500 slush fund. This is a pad for little stuff that I may not have though of that can be just big enough of an expense to throw off the budget.
Having all of the above in your emergency fund will make sure you are covered for just about any unexpected event that comes up in life. It is not a question if something will happen but when. Be prepared and avoid financial mayhem!