- Rent / Mortgage
- Electric Bill
- Gas Bill
- Water Bill
- Trash & Sewage Bill
- Car Payments
- Car Insurance
- Gas
- Oil Changes
- Tires
- Other Maintenance
- Health Insurance
- Dental Insurance / Dental Exams
- Contacts / Glasses
- Prescriptions
- Groceries
- Clothing
- Dining / Entertainment
And anything else you can think of. It’s important to consider every possible expense. Even irregular expenses. Then figure out how much it would cost over a 3 to 6 month period. Sum up your expenses and that’s how much you must have in your emergency fund.
Then remember that your emergency fund is for emergencies. Car insurance is not an emergency. It comes due every 6 months. It should be part of your regular budget.
Do not invest the money in your emergency fund*. Losing your job and the market crashing can be highly correlated events.
Do not rely on your parents as an emergency fund. Be an adult.
*If you’re flush with cash, then you can invest your emergency fund if you double or triple it. Point being, the stock market could crash 50-70%, and you would still be able to liquidate your stocks and have a 6 month emergency fund. This is an example of how the rich get richer.
Written in 2015
1. Warning
2. Emergency Fund
3. Credit Card Debt
4. Employer Matched Retirement Funds
5. Other Debt
6. Time Horizon
7. Index Funds
Podcast: Investing 100