Do we really need an emergency fund?

[Anonymous]

Here is our situation:

We both work full time in unionized jobs. Chances of either one of us losing our jobs are less than 1%.

We both have life insurance and disability insurance.

We have a small savings account (less than $10k) as well as $12k in investments and the money we have put away for retirement (also less than $10k each).

Do we really need a six month emergency fund? I cannot think of any scenario in which we would need that much money.

[Anonymous]

yes, you need some emergency fund, maybe three months. I would up your retirement savings pronto.

[Anonymous]

Anonymous wrote:yes, you need some emergency fund, maybe three months. I would up your retirement savings pronto.

We do aim to normally have about 3 months, but things have been tighter lately so we're not saving as much.

We both have pensions (police officer and teacher), so it is hard for me to know how much additionally we should be saving. We don't plan to move so we would have long paid off our mortgage by the time we're eligible to retire.

[Anonymous]

Anonymous wrote:Here is our situation:

We both work full time in unionized jobs. Chances of either one of us losing our jobs are less than 1%.

I wouldn't be so sure. There are some unions who are faced with the choice of eliminating folks or taking across the board pay cuts. Do you know which way your union will go? If your union serves the federal government (like my wife's does), do you know how the union will respond to downsizing efforts if sequestration hits?

We both have life insurance and disability insurance.

We have a small savings account (less than $10k) as well as $12k in investments and the money we have put away for retirement (also less than $10k each).

Do we really need a six month emergency fund? I cannot think of any scenario in which we would need that much money.

The emergency fund is also important for unexpected major expenses. How old are your cars? What would you do if you had a major expense (say $2500) on a car? What if an appliance goes out (if your furnace dies and you need a new one, which can be over $2K). What if a family member becomes ill? Can you handle FMLA leave without pay to go and take care of a parent who has had an accident and can't care for themselves? Do you have flood insurance (separate from most home insurance policies)? What if the next major storm comes through and floods your basement and the insurance will not cover repairs. Can you? What happens if one of you needs unexpected surgery and need to be bedridden for 2 weeks post-surgery. Do you have enough leave? Or will you need FMLA?

Emergency money is not usually needed, except in an emergency which is typically something unexpected. You can gamble that nothing unexpected will happen and most of the time you'll be right. In the rare case that something does happen, if you don't have an emergency fund, what will you do?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Here is our situation:

We both work full time in unionized jobs. Chances of either one of us losing our jobs are less than 1%.

I wouldn't be so sure. There are some unions who are faced with the choice of eliminating folks or taking across the board pay cuts. Do you know which way your union will go? If your union serves the federal government (like my wife's does), do you know how the union will respond to downsizing efforts if sequestration hits?

We both have life insurance and disability insurance.

We have a small savings account (less than $10k) as well as $12k in investments and the money we have put away for retirement (also less than $10k each).

Do we really need a six month emergency fund? I cannot think of any scenario in which we would need that much money.

The emergency fund is also important for unexpected major expenses. How old are your cars? What would you do if you had a major expense (say $2500) on a car? What if an appliance goes out (if your furnace dies and you need a new one, which can be over $2K). What if a family member becomes ill? Can you handle FMLA leave without pay to go and take care of a parent who has had an accident and can't care for themselves? Do you have flood insurance (separate from most home insurance policies)? What if the next major storm comes through and floods your basement and the insurance will not cover repairs. Can you? What happens if one of you needs unexpected surgery and need to be bedridden for 2 weeks post-surgery. Do you have enough leave? Or will you need FMLA?

Emergency money is not usually needed, except in an emergency which is typically something unexpected. You can gamble that nothing unexpected will happen and most of the time you'll be right. In the rare case that something does happen, if you don't have an emergency fund, what will you do?

OP - this PP has given you the perfect answer - your emergency fund is not just for job loss, it's for any type of emergency, whether it is health related, car or home related, or family related.

[Anonymous]

That post was really helpful PP, thanks!