This past year I made the New Year’s Resolution to fully fund my emergency fund for three months of critical expenses which was $10,000 in my family’s case. $10,000 would enable us to continue paying the mortgage, car payments, insurance, etc. for three months.
While three months is on the low side of the three to six months estimate most experts say we all need saved, I was blown away that $10,000 was only three months. I thought that that much money would have been closer to six months. I didn’t realize how wrong I was until I actually sat down and did the math. So, I guess we all should take a little lesson from my mistake (yet again!). You should calculate how much you need to save based on actual figures and not numbers you pull out of thin air. $10,000 sounds like a great number until you do the calculations and realize that you have $3,300 worth of mandatory expenses every month. Then, you realize that maybe $10,000 isn’t as large a number as you originally though.
So, how did I do? Horrible! Currently, my wife and I only have about $4,000 or so in emergency savings stashed away in a money market fund.
2009 New Year’s Resolution – Fully Fund Emergency Fund ($10,000)
So, needless to say, next year’s resolution is going to be the same. We are going to make it to our $10,000 if it kills me.
Are you making any financial New Year’s Resolutions this year? What are they?