Our Emergency Fund

Difficult topic this is. Suze Orman advises an eight month emergency fund. Some bloggers like mymoneyblog have twelve months of cash stashed at readily available accounts. Mr. Money Mustache hardly ever keeps more than 3,000 dollars in cash. My husband and I had “the talk” about our emergency fund.

I was shocked to find out that our emergency fund is 152% at the moment. One hundred percent would be our average annual expenses without doing any fun stuff. In case we would both lose our jobs this is the amount of money we would need to maintain our basic lifestyle. It feels ridiculous to have that much money in saving accounts at a lousy rate. Currently this rate in The Netherlands is about 2,5%…I know… Our mortgage interest rate is 4,35% which I think we negotiated pretty well, what do you think?

Anyway, I dropped the fact that I would really like a fixed number for our emergency fund so that whenever we exceed that amount we’ll be using that to make extra mortgage payments. My thoughts were to have an amount that equals 2,5 months, but my husband felt more comfortable with the number that equals a 5 month emergency fund. I have to add that I have very little, if no, risk at losing my job in the near future. My husband works for a large company and in these days you just never know if a company is going to lay off people. For now, we both think he’s safe. Also, he wouldn’t have a hard time finding a new job with his skills and degrees (ICT).

We are now thinking of this new idea but we haven’t decided whether we want to go for it just yet. On Thursday we’ll meet our mortgage advisor and tell her that we want to make an extra mortgage payment equaling 7,5 months of average expenses. Also, we’d like to draw up a plan for the future about these extra mortgage payments. Again, Dutch mortgages are a bit difficult to explain. Our mortgage is split into three parts. Two-third are two guaranteed savings account mortgages and one-third is an interest-only mortgage. We are going to “invest” in all three of these, equalling 2,5 months worth of expenses in each.

What amount of emergency fund do you feel comfortable with?


Mrs EconoWiser


3 thoughts on “Our Emergency Fund

  1. marcel

    We’re both 45 years old and as you know it is not easy to find a new job when you’re over 40 in the Netherlands so we feel comfortable with an emergency fund of 2 years of expenses. When we were in our 30s. we felt comfortable with 6 months in expenses so it’s really age dependent.

  2. econowiser Post author

    That’s totally true! My husband is 34 and I am 31. So in our case it’s best to make extra mortgage payments and have a smaller emergency fund. Thanks for sharing your story in a nutshell.

  3. spaarolifantje

    I’m quite comfortable with a low amount of money in my savings account (say 2 months of expenses). This is because of a myriad of reasons: I’m young, there are no children dependent on us, we both have an income, we are both eligible for social security if we ever get fired, there are a lot of jobs I can and will apply for if I ever get fired, our fixed expenses aren’t that big, and I can take money out of investments (investment funds, savings deposits) if I really really need to.


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