How much of an emergency fund do you need?

When we started intern year, we knew we had a few financial goals in mind!

  1. Build an emergency fund
  2. Max out our Roth IRA
  3. Save at least 25% of our take home pay
  4. Attempt to keep up with accrued interest on our loans

When we first decided on creating an emergency fund, I don’t think we ever specified whether it was for four or six months. It seemed far away at the time.

We knew our minimum emergency fund would be at least three months, but we were also saving aggressively to max out our Roth IRAs during the first half of residency. (Honestly, this hasn’t really changed since we are in the middle of maxing out our 2020 Roth IRAs and continuing to build our emergency fund).

The thing is, as we are getting higher in savings, the less ambitious I am to build a six-month emergency fund. It honestly just seems like a lot of money! So, the other day I asked Braden how much of an emergency fund we are building and he responds, “Four months?”

As I write this, I am not sure where my emergency fund ambivalence is coming from. Ultimately, I think it stems from the fact I can see the money in our high yield savings account and so I am less concerned. This is despite the fact the circumstances of why we are building an emergency fund haven’t changed. (i.e. we could total our car, an earthquake could happen, our water heater could go out etc).

I posed the question on our story poll, and at first when I asked most people responded a six-month emergency fund would be best. I then had a follow up question asking for you to think how much you would need to have save for a six month emergency fund, and then asked again the question of how much of an emergency fund individually you plan to have. The most common answer was split between four to six months.

Is it that we know we should have six-month emergency fund and we settle for four?

Ultimately, I think we will eventually get to a six-month emergency fund, but I wanted to share my inner struggle.

Have you hit a mental financial roadblock? What helped you to overcome it?