Emergency fund for a grad student with no attachments?

Question

I am a current grad student who works full-time. I do not have a wife or kids, and live a relatively moderate lifestyle. I rent an apartment and have low car/student loan payments.

Should I still shoot to have a 3-6 month emergency fund or can I get by with less than that?

Answer 1

Your emergency fund all depends on what _emergency_ you want to be prepared for.

For most people, emergency could mean unexpected house repairs, medical bills, auto repair, and job loss. For you, it may be different. What are the items in your life that may experience catastrophic failures and what are the likelyhood of actaully happening? AND, if that happens, what are the likelyhood of quick recoverly? (like job loss)

AND, more importantly, what is your comfort zone?

I think you should have at least 3 months bug shoot for 6 months, but that's just MY opinion.

Answer 2

I would shoot for 6 months of living expenses because you want to maintain maximum flexibility when you graduate. You don't want to feel pressured to take the first job offer that comes along just to start getting a paycheck. Plus there are numerous situations, whether "emergency" or not, that may arise and call for substantial cash savings in your near future.

What if it takes you 6 months to get a job? What if you decide to get married (and therefore want to buy an engagement ring, etc)? What if you suddenly need a new car? Or what if you just want the option to take some time off before launching into the job market? It's not how much you "need" that matters: it's how much it takes for you to have the options you desire.

However keep in mind that one month of expenses might not be very much. "Emergency" assumes you are unemployed: don't include savings, income taxes, etc when calculating that number. Simply add up your rent, utilities, and loan payments, plus a few hundred for food and gas, and there's your monthly number.

Answer 3

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