Poll: size of your emergency fund

How large do you keep your emergency fund?

  • I do not have any. I rely on margin loans at IBKR or similar.
  • I do not have any. My job is very stable and I can cover unexpected expenses by not saving for a month.
  • 1 month of expenses
  • 3 months of expenses
  • 6 months of expenses
  • 9 months of expenses
  • One year of expenses
  • More than a year of expenses

0 voters

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Voted for 1 month of expenses but I’m actually holding a fixed amount of CHF 1000 + EUR 500 (single, good health, no dependants). Bigger needs would be fulfilled by, in that order: available cashflow, digging into debt, relying on family, friends and other supports from my social network, selling assets.

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Depends on your definition of an emergency fund:

20 CHF on my current account - a day or two’s worth of food? (I even had to dip into it, this month).

A credit card?

For yearly expenses, I have a standing order that transfers 1/12 of the budgeted yearly total to (kind of) a savings account each month. As I’m paying my health insurance at the end of the year and into my 3rd pillar at the beginning of the next year, this “savings” account will fill up over the course of the year. Strictly speaking these funds are budgeted, so not an emergency fund, I suppose? But I could postpone my third pillar contribution if anything unexpected came up.

If, on the other hand, something happened in January or February, right after I emptied that account, I may be screwed? :sweat_smile:

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Delay the 3a contributions to around june so that there’s always something in that account? That is, if you expect to rely on these funds in case of emergency, of course.

I got about 4 months expenses (8kchf) on my BCGE saving.
It is not fully accurate as I got also 30keuro to cover any improvements or emergency fix to perform on my French rental flat. This is for my piece of mind.

I have actually around CHF 25K (~8 months of expenses), so I opted for 6 months in the poll.

My EF will grow cause I am anticipating for a car change in the next few months (actual one is getting old; my strategy is to buy the new car “cash” when cost for maintenance exceed the residual value of the car).

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Currently no cash EF at all. IBKR margin and 10k limit on my credit card if anything serious comes up.

But I’ll probably rebuild it in Q1 2023, 10k (2 monthly expenses) should be enough.

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Shouldn’t this be a separate pot? A new car is not an emergency, or at least I wouldn’t classify it as an emergency.

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You are probably right, but I won’t create another 20-30K pot with money sleeping in a bank account waiting to be used. In any urgent case, I can use my Credit Card and/or IBKR loan.

Where I live, I consider car as a total necessity because offer for commutes are not frequent and car rental is not an option.

If you plan for a major expense in the coming month this is not part of your emergency fond even if you keep them in the same account.
Your emergency fond has still the same amount.

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It doesn’t need to be a separate account, I mean it doesn’t matter whether you have 2 small pots or one large pot. Personally I just wouldn’t mix up emergency funds and other savings.

A necessity is not an emergency.

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6 months is the absolute minimum required if you want to have enough money to quit a job on your own because it takes around 5 months until you see money from the unemployment insurance. If you have less than 6 months you are potentially a slave of your current employer. Of course, in most cases you will get a new job earlier but if not then at least you can cover expenses until there is new cash flow.

I also have reserves for new car, taxes, holidays/traveling, etc. but all those funds are overlapping, otherwise I would need at least 120k or so in cash which is probably also not that good. I also use the emergency fund as an investment buffer when prices are low such as during the Covid dip or now in order to invest more and buy cheaper.

Through that overlapping or over-commitment of different funds you take small risks here and there but you can keep the funds a bit lower, which is also good. Relying on loans, credit cards, relatives or anybody else is an absolute no-go for me.

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Not sure between “I don’t have any” and “More than a year of expenses”.

I don’t have a dedicated emergency fund, but I do have enough cash to cover about 4 years at the moment.

I don’t want any more equity exposure, in order to sleep well at night. 2nd and 3rd pillars are well funded, and also hesitant to commit to real estate investment at this point, so it’s just lying around waiting for bond yields to rise a bit more, or some life circumstances to change.

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I think the main point is whether this cash is included in your asset allocation (often 5%) or separate. This is because in a downturn, cash within the asset allocation automatically gets rebalanced into stocks, diminishing the period covered, but the emergency fund wouldn’t.

On the other hand, people close to FIRE or beyond FIRE and who have a cash and bond allocation probably do not need an emergency fund anymore, if their liquid part covers say 7 years of expenses. The emergency fund is more critical for those of us still early in their FIRE journey.

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This can be interpreted in two ways: either it means this is an emergency fund (because you do not rebalance it into stocks or bonds), or it means you are trying to time the market. In the second case, if you are reluctant to rebalance, it could mean your target equity allocation is too high compared to the level of risk that lets you sleep at night.

I do use cash to rebalance into stocks. I meant that I don’t want to increase my stock percentage.
So, it is a part of the asset allocation, not an emergency fund, I guess.
It’s just that I have a relatively high cash allocation (much more than 5%) in absence of high CHF bond yields during previous many years.
Which is bond market timing, I agree.

Makes a lot of sense!

Personally I don’t time the market with bonds. I have a relatively short duration on bonds so rising yields are great news to me. In the long run, bond returns are mainly driven by nominal yields, not by unrealized profits and losses that can give a “false sense of loss” in particular with high durations.

You are both right, I mix up my saving account and my EF. My EF = my savings. All the rest goes to IBKR.
I should definitely split the two account so I can track precisely the saving part from the EF, and so the EF stay for what it is supposed to be :slightly_smiling_face:.

And yes, car is an absolute must, but right it is not vital. Thanks guys for correcting me ! Glad to be part of this caring community :smiley:!

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1 months unexpected expenses covered (5K). Out of this 5K, 2K is cash and 3K is withdrawal (if needed) using Revolut (top-up, send to bank acct. and then withdraw).

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Too much cash, almost a year of expenses but I’m looking for a job and the I abandoned the dreamland Switzerland for love (Vienna now)… sad :frowning:

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