Building an Emergency Fund: Why There’s No One-Size-Fits-All Answer

Determining the ideal size of an emergency fund is a deeply personal decision, influenced by individual financial circumstances, goals, and, most importantly, peace of mind. The ideal amount depends on your unique financial circumstances, goals, and—most importantly—your peace of mind.?

In a recent poll, I asked my community, How many months of expenses should you save for an emergency? The results were fascinating:

• 78% of respondents chose 6 months of expenses.
• 22% opted for 12 months of expenses.
• 0% chose 3 months of expenses.

This is not just numbers; these numbers tell a story about how people view financial security. For most, the idea of 6 months’ worth of expenses provides a balance—enough to cover unexpected situations without feeling overwhelming. A smaller percentage prefer the safety net of a full year’s expenses, signalling a desire for maximum security. But what’s important to note is that no one-size-fits-all approach works for everyone.

So my advice for you, forget the expert recommendation without fitting it to your circumstances.

Why the Right Amount Is Personal

Saving for emergencies isn’t just a numbers game—it’s an emotional decision. It’s about what helps you feel secure and enables you to weather life’s uncertainties without constant stress. It is not easy as it sounds, that’s why I am writing a book focusing on understanding your own self and defining financial sense through your feelings and past experience.

1. Your Life Situation: A senior tech professional earning a high income may have different needs than someone just starting their career in contract cybersecurity role. If you have dependents, a mortgage, or other major responsibilities, a larger fund may feel necessary to protect those you care about.
2. Your Risk Tolerance: Some people thrive on flexibility and minimal “cash drag,” preferring to invest most of their money. Others find that a substantial emergency fund helps them sleep better at night, knowing they can handle anything life throws their way.
3. Your Industry Stability: Tech professionals, for example, may feel secure in their roles but could still face layoffs or market shifts. In those cases, having enough saved to pivot or take time to reassess can make all the difference.

At its core, the decision is emotional. It’s not just about surviving a tough moment but thriving in the face of challenges, knowing you have options.

A Look at My Personal Strategy

To illustrate how personal this decision can be, let me share how I approach my emergency fund. While it may not work for everyone, it brings me peace of mind and a sense of balance:

• 3 months of income in a savings account for immediate access to handle urgent expenses.
• 3 months of income in a rolling 6-month term deposit to earn a higher return while maintaining liquidity.
• 6 months of income in an investment account to provide long-term growth and a safety net for significant, unexpected events.

This approach gives me confidence that I can handle short-term emergencies, stay financially resilient, and grow my wealth simultaneously.

Important Note: This is not financial advice—just what works for me. Your emergency fund should be built around your personal situation, needs, and goals.

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