I’ve always been told that you need to have three to six months of living expenses in an emergency fund. That’s what “they” say, anyway. Here’s what I want to know: who are “they,” and what world are they living in? Because in my experience, saving for an emergency is like watching your sink leak: drip, drip, drip. It can slowly add up to a puddle, and then a small dish, and maybe even a stockpot, but man, it takes a long time. Also, what constitutes living expenses—rent, electricity, water, and food? What about daycare costs? A car accident? A surprise hospital bill? A DIY home project that ends up being much more expensive than anticipated? Finally, let’s say you do build up some sort of emergency fund: do you ever touch it?
Clearly I have a lot of questions, mostly because I love the security blanket an emergency fund can provide. But if you’re anything like me, you might also find it difficult to put a bunch of money in one spot, “just in case,” and stare at it every time you open your checking account. These challenges will help you find a good middle ground, where you’ve got a line of defense but you’re also not completely panicking about the amount you’ve set aside.