Comments on: Emergency Funds For New Graduates

By: amanda

amanda — Sun, 03 Jan 2010 23:33:51 +0000

The rule I was given, was about 3 months of bills. This seemed like a good rule, until the past year when people were running through 18 months without work…

By: What I wish I knew about managing my finances before I started college | The Wisdom Journal

Fri, 04 Sep 2009 05:59:48 +0000

[...] up for life’s little surprises helps me sleep better at night. Whether you want to call it an emergency fund or money for a rainy day, the money reserve will help you financially deal with [...]

By: Studenomist

Studenomist — Fri, 06 Feb 2009 05:50:14 +0000

@Ken thank you for the kind words.

@Vik Dulat Treating every paycheck like it’s your last sounds like a great idea but the unfortunate part is that many people these days really don’t know if it is their last pay check.

@Frank $10k that’s a really solid emergency fund! That’s more money than most people have in their savings account or retirement account. Congratulations and I hope to see you around Studenomics.

By: Frank

Frank — Fri, 06 Feb 2009 02:01:12 +0000

I graduated 9 months ago and have an emergency fund of $10k. About 8 months expenses at my current spending rate. If I lost my job or something I could cut back and turn that into about 12 months.

I have that with no fear of myself being laid off. I also am rather risky in all of my investments. I just am not naive about what could happen and want to cover my bases.

By: Steve

Steve — Sat, 31 Jan 2009 02:36:13 +0000

One size definitely doesn’t fit all with regards to emergency funds. A lot of good parameters are listed above. You should also look at how much debt you have. You don’t want to not be able to make credit card payments, car payments or mortgage payments because you lost your job. Also, you should think about what your deductible is for different types of insurance. You want to be able to cover these deductibles.

Everybody defines emergency differently. How do you define emergency? Is it losing your job? Is it getting in a car accident? Is it a fire burning your house down? Is it an expensive medical procedure?

By: Stephanie PTY

Stephanie PTY — Fri, 30 Jan 2009 21:47:07 +0000

I don’t remember where I first heard of the idea of a “getting established fund” (herein referred to as an GE fund) – I swear it was Suze Orman, but I can’t find anything in her YF&B book about it. It’s also entirely possible that I made it up myself (a google search leads to my site) and I can’t remember that I did that… but I doubt it.

As to how much you should put in it? Well, since you should be saving up for it in college, not after (because after is when you need it, in fact, you’ll probably start drawing from it during the last semester), it should be an amount, not a percentage. I’d say somewhere between $3,000-$5,000 (in USD or Canadian dollars). It’s a big cushion, but it would cover security deposits, moving, and getting a few suits and maybe even some very, very basic furniture (I’ll be needing to buy a bed).

By: Studenomist

Studenomist — Fri, 30 Jan 2009 19:40:55 +0000

Thanks for the feedback guys. I am really curious to see how other people my age deal with emergency funds.

@the weaknomist I like your take on the 10% emergency fund. That seems very doable.

@Grant Baldwin You seem to have a higher risk tolerance than most people. I like how you are confident enough in yourself to not stress about money too much.

@Stepahanie PTY That’s a very interesting idea, a “getting established” fund seems like something every young person should try. Would you advise putting in 10% of your income as the weaknomist did?

By: Stephanie PTY

Stephanie PTY — Fri, 30 Jan 2009 16:25:57 +0000

I’m graduating in… oh god… 4 weeks? (Yes, 4 weeks.) My emergency fund is just below $500 right now. I’m mostly working on what I called my “Getting Established” fund – money for apartment security deposits, moving expenses, sending out resumes, work-related clothes. It’ll double as an emergency fund, as well.

By: Grant Baldwin

Grant Baldwin — Fri, 30 Jan 2009 14:51:38 +0000

The magic number for the emergency fund is a mystery. When I started my business, I was also working two part time jobs and trying to live the dream on the side. I wanted to know I was at least getting a paycheck from somewhere, so that if the new business had a rough month, we could still survive.

Because of that, I only had a 1 month emergency fund. That was fine for ME, because if things fell apart, as a 20-something, I was confident I could find some type of part time gig to supplement things.

But I agree with the point made that you have to find what makes sense for YOU and YOUR situation.

By: the weakonomist

the weakonomist — Fri, 30 Jan 2009 14:38:09 +0000

I’m a 20 something only a few years out of college and support only myself. However I’ve got a plan for once married, with kids, and all that for your emergency fund. It works for the single broke types as well.

For each person that works have 10% of their income in an emergency fund. For each child 5%, and for each pet 1%.

So if you make $50k your emergency fund should be $5,000. Get married to someone who makes $30k, and the fund should be $8k. Throw in a kid and it grows to $12k. Pick up an accident prone Boxer like I’ve got and your Emergency Fund is $12,800.

That sounds like a lot, but if you’re just out of college and make $30,000 a year than the fund is just $3,000.

Remember this is a rule of thumb, you should always adjust your system to fit your needs.