Too much is never enough. Or is it?

Money, it's a crime

Image by kiki99 via Flickr

For me, $10,000 is the magic number. When I see five digits in my savings account, I’ll have achieved my main financial goal for the year.

Handily enough, I also settled on $10k for my rainy day fund. A nice round amount.

And then today I started wondering just how far that would really go. Yes, we live in a welfare state, but the rules on cash assets are pretty strict. Plus if you have a working partner, that basically seems to rule you out for assistance.

$10,000 would cover about four months at our current expenditures (obviously, without saving anything during that time). That’s not a very long time.

Then again, I would save about $100 a month in transport. We’d trim the grocery budget, maybe our internet package, and we could cut Sky TV. T could step up and shoulder more of our costs – I’m talking everything household, from rent to insurance to car maintenance.

But if he was laid off again – incidentally, his ex-employer that made him redundant after virtually promising him an apprenticeship has gone into voluntary receivership – things would really have to change.

How many months would your EF cover, and how stable is your employment? If you’re in a couple, how does that affect your E-fund?

12 thoughts on “Too much is never enough. Or is it?

  • Reply danablair September 29, 2010 at 03:11

    Oh boy, I just blogged about my finances in a guest post on dezolutions.com. My savings has certainly dwindled since living on my own, but it does help having a second income coming in now. I would probably last about 6 months, maybe longer depending on unemployment benefits, but I would never let it get that far. I’d move home before that happened!

    Luckily, my job is pretty stable now. I left my unstable job behind. Worrying about money makes me crazyy!

  • Reply The Asian Pear September 29, 2010 at 03:28

    My goal is $25K-$30K for my EFund. That’ll be approximately 1 year of unemployment for me and my parents. I’m in a pretty secure job. Even if I was laid off, I’d be given a pretty sweet severance package. My EF goal is pretty high but it’s a good number in case something ever happens cause you never know.

  • Reply Amber from Girl with the Red Hair September 29, 2010 at 07:11

    I think $10,000 could get us through 6 months, at least. Right now we spend about $2,000 a month for rent/groceries/bills/savings (yes I include paying myself as a “bill”/everything else) We live in a dirt cheap (kind of crappy and small) apartment, we don’t have cable and we don’t eat (therefore don’t buy) meat, we also never eat out – maybe 1-2 times a month.

    If I became unemployed we’d likely move home and live with my mom for awhile. Not ideal, but it would work!

    • Reply eemusings September 30, 2010 at 16:34

      @Amber That’s an interesting thought. I count savings as a bill too, but if I was unemployed and living off savings, I wouldn’t. After all, you’re drawing down on it…so you’d only be “saving” your savings…I don’t really know how that would work. I guess you could pay yourself your normal $2k from your EF, and then transfer your usual amount back into it. but it doesn’t really make a difference to the bottom line as it’s not true saving; it’s just making what you have last longer.

  • Reply Sense September 29, 2010 at 08:31

    I could get by for 6 months, with pared down expenses like you mention (and eating PB&J every day!) on my $10K EF. Then again, if I lost my job here in NZ, it’s back to the US I go! Staying with my parents until I found a decent job, $10K NZD should last a while longer than 6 months.

    My job is on contract til next August; one of my my bosses just wrote me into her budget until next July, and there are no changes planned for the 2011-2012 year. The other boss has oodles of projects and money coming her way, so I don’t see that drying up anytime soon, either.

    Now if only my pay would get increased to help with the new GST, I’d be all set!!

    • Reply eemusings September 29, 2010 at 11:08

      @Sense Tax cuts also come into effect! But bus prices are going up too (4 per cent, more than the 2.5 GST rise), power’s going up, and that’s just the start. Indeed, a pay increase wouldn’t go amiss 😛

  • Reply FB @ FabulouslyBroke.com September 29, 2010 at 14:19

    Too much is never enough!

    That, I agree with. I’m so paranoid that I won’t have money or that I’ll run out sooner than I think that I over save.

    How many months would your EF cover, and how stable is your employment?

    Right now, 30 months based on my $1000/month premise (splitting with BF 50/50, so really $2000 total for 2).

    Employment is okay. Erratic contracts but I’d rather work less for about the same amount I used to earn, than to work the whole year for the same cash.

    If you’re in a couple, how does that affect your E-fund?

    My e-fund is just for me. BF has his own, but I am not worried at all. He has more than me and always covers his half.

  • Reply FB @ FabulouslyBroke.com September 29, 2010 at 14:20

    Wait I forgot, I have another 10 months saved in a retirement savings account that I could technically use like cash but would touch after my actual cash savings ran out..

    So 40 months….

  • Reply Carnival of Personal Finance, Oktoberfest Edition | MMC-NEWS October 5, 2010 at 13:42

    […] Musings of an Abstract Aucklander asks (about his e-fund) Too most is never enough. Or is it? […]

  • Reply Money for couples: The contributions conundrum « Musings of an Abstract Aucklander October 6, 2010 at 11:18

    […] Thanks to Kimberly at Alpha Consumer for including me in this week’s Carnival of Personal Finance! If you haven’t already commented, I’d love to hear your thoughts on e-funds and just how much is enough. […]

  • Reply Carnival of Personal Finance, Oktoberfest Edition | MMC-NEWS October 9, 2010 at 15:58

    […] Musings of an Abstract Aucklander asks (about his e-fund) Too much is never enough. Or is it? […]

  • Reply 20 financial milestones for your 20s – how I stack up « Musings of an Abstract Aucklander December 17, 2010 at 14:57

    […] 5 – Build an adequate emergency fund Done, although I wonder if $10k is enough sometimes. To some it may seem excessive, to others, puny. […]

Leave a Reply

Your email address will not be published. Required fields are marked *