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I think as far as a good percentage depends on your circumstances. Are you budgeting?  I use a zero based budget.  Try to budget anything you can to put away right off the top each pay.  And the end of each pay period ANYTHING that is leftover - I don't care if it's $2.67 - gets moved to my emergency fund savings account.  I also sell things from around the house and stick it in there too. If I earn any money pet or babysitting it goes in there as well...every penny!

I used to save money when I was working, now retired. My employer automatically put X amount of dollars in my savings account every paycheck, rather than a percentage, it was a specified amount. Mine was $100. This gradually built up and is our emergency fund. The one thing I don't like about having a savings account is the horrible amount of interest you earn and then have  to pay tax on that interest come tax time.

Lately because we have a Home Equity Line of Credit, we have been opting to pay on  principal only plus the regularly scheduled payments. The reason for this is because the percent earned on the savings account  0.025% is significantly less than the HELC at 3.25% variable rate. So until the HELC is paid off we are not depositing into the emergency account. Any miscellaneous cash goes onto the HELC.

I think it depends on how safe you feel. We have only 3 months saved in our emergency fund for mortgage, food, utilities, and phones. But my husband and I work in fields that we feel it would be easy to find other employment. My sis, on the other hand, has three years' expenses saved! But it makes her feel safe, so it makes sense for her. For me, we saved with gift money from family, cutting out entertainment extras for a while, and put in $ when our car payments were done. Then, we really don't touch it. I think a lot of people dip into their EF from time to time for trips, car maintenance, other things. We really only use it for real, surprise emergencies.

My current plan of action for my emergency fund: Every bit of "extra" money I make or get goes into my emergency fund. Stimulus check? Emergency fund. A side gig contract based income? Emergency fund. Tax refund? Emergency fund. Rebate? Emergency fund. Etc, etc... 

Later on, once I get my debt paid off, I will have a different emergency fund plan of action. I will still have my budget that includes sink funds, regular bills, grocery shopping, etc. BUT the money that normally would have gone into my debt payments will go into my emergency fund. By then, I will have finished several courses in copy writing and should be at a higher paying job. The difference in pay from my current job and the higher paying job will go into my emergency fund. Every bit of money that I can put into the emergency fund, I will until I have enough funds to cover at least a year's worth of living expenses. 

Once I have a year's worth of expenses saved up, then all the income that would have been going into the emergency fund will go into retirement savings, personal development, professional development, hobbies, investments, self-sufficient organic biointensive farm leveraging permaculture, and misc fun activities that I just simply enjoy. Yes, those newly added items will require some money, and in my budget, they all will be counted as expenses even though some are technically savings. As such, my year's worth of expenses will increase. Once I have an idea of how much I will spend on them on a yearly basis, more funds will be added to my emergency fund for those newly added times until I again have enough money to cover a year's worth of expenses. Once I do, I will take a break from putting funds into my emergency fund. The funds that I would have normally put into my emergency fund will go straight into retirement savings and investments.

If later on my expenses increase, back to putting funds into the emergency fund until I have enough savings to cover a year's worth of expenses. The goal is to always have enough funds to cover at least a year's worth of expenses. 

Last edited by Pax

A good way to save for an emergency fund is to open a savings account with a credit union across town, and without an ATM card. We added all windfalls, bonuses, stock options, overtime, and set up an automatic draft from our paychecks. The minimum is 3-6 months. We have a 2 year emergency fund, which we had in place before Covid-19.  The rules are changing, and experts agree  3-6 months may no longer apply, and 6-12 months offers more insurance against illness, and job loss. In order to accomplish this, pay down consumer debt, and student loans. It will be much easier to save without debt.  Secure a mortgage that can be paid on one salary, and avoid any second mortgages on your home. An emergency fund is an insurance plan for your life, and a necessary part. If you start money savings challenges, this can help jump start your emergency fund. Budgeting, and living below your means are other methods to achieve a healthy emergency fund over time. Some experts agree that a minimum of $2,000 per family member is a good emergency fund goal, and any pets should their own separate emergency fund. The emergency fund is the glue to a financial plan, and should therefore be very important. 

I definitely agree with what Veronica said about paying a mortgage on one income versus the max of 2 fulltime jobs. That's a quick way to get into trouble with things like COVID or other emergencies where hours are cut or people are furloughed, laid off, demoted, etc. We are paying off our house rapidly so we can be mortgage-free and have that disposable income to also go to more savings and investments and enjoying life and travel. 

Some tricks to save money without even thinking about it, as others have said, have a portion of your paycheck go automatically to savings, that way you don't even miss the money. Also as someone else said, the day before my paycheck hits, if I have, let's say $50.00 in my checking account, it gets "swept" into the savings. I obviously didn't need it as it was left over, so off to the savings it goes. Some banks offer accounts tied to your checking that round up from your debit card purchases. My Wells Fargo account has the Way2Save option where every debit card purchase I make, they transfer $1 to the Way2Save, plus you can add to it anytime as well. I use that as my accessible E-fund. And another trick is, give yourself a budget for groceries. Mine is $200.00 for two weeks worth of groceries. If the bill comes in at $160.00, then sweep the rest into savings as you were planning on spending it anyway. Little things like that make a huge difference. Of course, if using cash, store the coins in a jar and let that build up. We have a vase-full right now and are waiting for bank lobbies to open up again so we can exchange them. 

A rule of thumb is to always save at least 6-months' worth of salary.

So that, at any time of emergency (i.e. loss of job, health reasons, pandemic), you have money that you can use and 6 months can help you look for a new job, recover from sickness without having to work or bounce back from the effects of a pandemic.

How?

First is after you receive your salary, prioritize saving for your emergency fund already. So:

Salary - Essentials (emergency fund, food, electricity, etc) = For Luxury and Wants

Only use what's LEFT for your other wants. Not the other way around. If you ask me about the percentage of how much, it depends on your current status and needs. What's important is you start saving now. You'll thank yourself later.

Second, don't rely on just one source of income.

Looking for a side hustle will always fast-track your financial goals. Nobody becomes a millionaire by working only 8 hours a day. You have two options... or better yet, do them both like I do:

(1) Upskill. This will be beneficial for you in the long run. Enhance your skills and look for a part-time. This may seem so much effort to do but it's worth it.

(2) Look for Rental Shops or Sites. When you do, better know if you can list your items for free. That's a good pointer to watch out for. List ALL of your items/tools that you don't use anymore. This is a really good passive income if Upskilling is still not feasible for you right now.

 

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