Emergency Fund: More than just a target number!

I have decided that a target dollar amount for my emergency fund wasn't enough. For most people it is ok but I like to be a little more detailed about it for my own life. I have come up with a list of sub-funds that the big number covers. I am assuring myself that multiple categories, in order of importance, are covered in the even of a financial emergency.

This idea spawned from the fact that I have multiple savings accounts. I originally got the accounts because of interest rate offers and other various reasons. I now have am using this to my advantage to repurpose them for specific parts of my emergency fund. The numbers happen to fall into place where I feel they needed to be.

Here is a break down of my target $10,000 emergency fund (in order of importance):

  • $5,000: Job loss/pay the bills general fund
  • $500: Medical co-pay and misc fund
  • $500: Car repairs
  • $1000: House Repairs
  • $3,000: additional job loss fund for more extended unemployment and misc. emergencies
I have the first 3 covered as of today. This brings me now to the extra $3,000 to add to my general fund. I am comfortable with a $5,000 general fund but would feel much better with $8,000. I am now adding $100 per month to the general fund and any extra income/savings will go to that as well. I calculate that I could live for 4-5 months off that $8,000 if I had too. The peace of mind I get is priceless!

Another "tiny" emergency fund that is built into my monthly budget. I have a $100 misc category that I will use up first before tapping into any fund. This keeps me from having to do $5-20 transfers for little stuff that would throw my budget off. It just makes my life easier to manage financially! I do track it and roll it over or transfer to savings if there is some left.