Thursday, February 2, 2012
Changing my Savings Goals
In January I set the goal of having a six month emergency fund set up, as well as $5,000 saved toward a house down payment fund. I've been making progress on these goals, as well as investing some of my savings.
However, I got to thinking about how much I need in my emergency fund. I just chose a six month emergency fund because it's on the high end of what's recommended. And I'm a high achiever. But, it makes more sense to consider what my E-fund would be used for:
*Possible layoff: I'd get unemployment, which would pretty much cover my bare bones expenses. I'd only dip into savings for things like car registration/repairs or other emergencies.
*Illness/Disability: I have sick time for smaller things, as well as a $200 cushion in my budget each month. For something bigger, I pay for disability insurance.
*Car issues: Can't see this being more than my three month fund could cover.
*Moving: Could probably absorb this into my regular budget and just need the deposit covered until I get my deposit back from this place.
So, all this points to a three month emergency fund being enough for me right now.
I know there could be a shit storm where all of these things would happen at once. But that's pretty unlikely. And if it did go down that way, I could raid my house fund to cover it. So, I've decided to switch up my goals. I've decided that I want to have three months worth of expenses in my E-fund by the end of the year, and $10,000 invested in savings for a house down payment fund.
This goal makes me feel that owning a home is actually in reach in the next few years, and it still makes me feel secure because I'll have a sizable savings in case something big comes up. My investment money is liquid, so I could pull it without penalty, but it's nice to have my down payment fund earning higher interest and in a less reachable place.
So, one month in and I've totally changed my goals. Anyone else change your mind yet?