Emergency funds are the talk of the town, and often the first port of call for those looking to get their finances in check. But how much should actually be in your emergency fund?

Popular finance moguls like Dave Ramsey suggest starting with $1000. I see your thinking, Davo. It’s a nice round figure, and it’s a hefty amount without being unachievable.

And okay, ultimately, any savings at all in an emergency fund is a start – whether you’ve got $100 or $1000, go you! But when setting a goal for your emergency fund, it’s worth taking a peek at your lifestyle first. Some might need more in that fund than others.

Look at your life and think about things that could go wrong – how much would you need for each of those?

I’ll start.

  • My laptop could get lost/stolen

  • My phone could get lost/stolen

  • A family member could fall ill or pass away – they’re all in the UK

  • Our car could break down

  • We could have a water leak/flood, or fire damage

  • My cat could need vet work

  • I could need dental work

  • I could need non-Medicare subsidised treatment

Okay, so how critical are each of those things, and how much would I need for them?

  • My laptop is essential for work. I’d need to replace it instantly for around $1600.

  • I have an old iPhone that I could limp along with, so I wouldn’t need to replace that right away.

  • My family all live in the UK, so if something happened, I’d need to get my tushy to the airport pretty pronto. A last minute flight could be up to $2000.

  • I don’t use our car for work or anything particularly essential, so we could hold off before fixing that. If we had an accident, our insurance excess is $500, so that’s worth having.

  • We own our apartment, so we’d need to have enough to fix anything that comes up. $500 for insurance excess or repairs is ideal.

  • Our cat is indoor, and only 1 year old, so his risk is slightly lower, but we put away $20 a week for him just in case.

  • Dental/medial work would be pretty crucial, as they’d probably be painful conditions. I’d be happy having $500-$1000 tucked away for that.

So by having a cat, a family overseas and a job that requires me to have a functional laptop at all times, I immediately need much more than $1000 to have a comfortable emergency fund. While you’d be pretty unlucky to have all of your disasters happen at once, I’d say add up 2-3 of your more expensive disasters from the list, and round that off as your emergency fund goal.

On the same token, if you rent your home, have no pets and don’t need your tech or car for anything critical, your emergency fund could be much lower. Having enough to pay your excesses on insurance policies could be enough peace of mind for you.

Assess your personal situation and find a sum that best fits your circumstances. Finance books are SO great, trust me, I love them. But before you take everything on face value, check in with your own circumstances and make tweaks accordingly.

Over and out, avo lovers.

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How Much Should You Have In Your Emergency Fund