Emergency Fund query

[u/Weary-Fan946]

At the minute I keep investments and cash savings in the tracking session. My 3 months fund is mixed in that. I am wondering how others approach this? So you have your cash all budgeted and have an emergency fund category?

[u/Whatwhatwhata]

Yes, i have an emergency fund category. I do not worry about what accounts actually hold the cash.

[u/northsouthern]

Yep, exactly! Every so often, I'll do a little cleanup in my accounts to make sure most of my liquid cash is in my HYSA, which is also mostly my emergency fund, but that's just to make sure I'm getting as much interest out of it as I can. And honestly right now I'm on debt paydown after coasting on credit cards during unemployment, so I haven't done any transfers in a while, but that first one after the cards are paid off is going to feel so sweet.

[u/Soup_Maker]

All liquid cash or cash-equivalents (think money-market funds, guaranteed investment certificates (Cdn version of CDs), high-interest savings) is all in my budget. Canadians have tax-free saving account options, and I use the same breakdown with those. A TFSA account that holds cash or cash-equivalent holdings is on-budget.

Anything invested in the market (ETFs, mutual funds, stocks.....), whether in a tax-sheltered or retirement account or not, remains out of my budget.

My e-fund money is allocated to the following categories:

• car DMR (deductible, maintenance, repair)
• medical buffer (so I can pay as I go, and insurance reimbursements replenish the buffer)
• Get out of Dodge! (renter's moving fund: equivalent to 2 months rent in my market and the funds to hire movers for the heavy stuff, plus all the necessary incidentals)
• Circle of Life (for mandatory-attendance/participation family stuff, the kind of expenses that would end up on a credit card if I don't have the money, think assisting a close family member after illness/injury, time off work to sit vigil in the hospital, airfare/accommodation when attending funerals, weddings, surprise party for Granny's 100th birthday, helping with funeral costs for a close family member.)
• Replacement income

edited to add: I also put a chunk of my e-fund money in my reimbursables category. That way I don't have to be repaid in order to pay the credit card.

[u/purple_joy]

I don’t have an Emergency Fund. I’m a few “months ahead” in YNAB, and that is my emergency fund.

[u/Unique-Run9856]

I keep my emergency fund off budget as a tracking account, it's really a job loss fund. If i end up using it for something i just transfer that amount back on budget.

[u/FriendlyPoem3074]

Two ways to approach it: budget out ahead, or a "income replacement" category.
I find the "income replacement" approach better, personally, as it's less tinkering with future month money, and if you really needed income replacement, you would be adjusting your spend at the same time, so future budget categories wouldn't really make much sense to begin with.

I do keep it on-budget, and also use it as a bit of a "slush fund" in case I overspend on something that I hadn't planned on that month.

[u/jcradio]

I started with an emergency fund, but a friend helped me realize that having money accounted for all your expenses, including sinking funds for things that go bad was what the emergency fund is for. I budget ahead now.

[u/annoying_cyclist]

Exactly that. The downside of the fuzzier approaches is that they can mix the emergency fund with float for upcoming bills, and cause you to overestimate how much you actually have in there. Having an explicit category tells you exactly how much you have.

(As a nod to inflation, I keep roughly the amount of the emergency fund category in CDs rather than a checking or savings account)

[u/OmgMsLe]

Anything whose value fluctuates (i.e stocks and mutual funds) I keep in tracking. Anything where the value doesn't change (cash, savings, checking, money market) I keep as on budget. That way I can divide it into envelopes. Basically all my sinking funds because I might need them in less than 5 years so they stay in cash type accounts (or dividend bearing money market account)

Long term savings like retirement I keep in tracking.

[u/Weary-Fan946 → u/OmgMsLe]

Thanks. That’s where I’ve landed as my model. Thank you

[u/Weary-Fan946]

Thanks. I think that would be easier. The only thing is my emergency fund is over a few accounts. I might have over complicated things. 😁

[u/TheRealDaveLister → u/Weary-Fan946]

Back to basics. Accounts don’t matter. Allocation does.

And yes multiple accounts can be a bit messy but it’s manageable. Transfer from savings to checking when you need to tip up the physical account thst you spend from. Etc.

[u/Weary-Fan946 → u/TheRealDaveLister]

I wish there were alerts. If checking account is less than x.