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Top 3 Questions to Ask About Your Emergency Fund



Do you have an emergency fund? Do you know how much money you need in your emergency fund? Does thinking about it make you stressed or anxious?


If so, then you’re in the right spot. Today, we’re going to discuss the top 3 questions you need to ask about your emergency fund. You’ll be able to determine exactly how much is enough for your emergency fund.


By the end, you’ll learn the formula I tell all of my clients to use to become more financially secure and sleep peacefully at night. This is an effective method to help you step towards financial security.


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Before we get started, what even is an emergency fund? An emergency fund is money that is easily accessible to you, in case something bad happens. It doesn’t all need to be cash in a savings account.


You can use safe investment instruments that keep your money liquid. “Liquid” means easily available in the event you need it. We’ll talk about this more at the end, but first-- let’s figure out just how much you need in your emergency fund.


Question 1

In the event that stopped working today, how many months will it take you to find your ideal job?


To be conservative, let’s think about how long it will take you to find your ideal job. We want to allow ample time for you to find a job that you would still enjoy working at everyday.


Question 2

How much cash do you need in your bank account for you to be able to sleep soundly at night?


Some of my clients know how much money they need, but most of them don’t. One time, I asked a client this question and she immediately told me $30,000.


I said, “Wow! That was fast. How did you come up with the number so quickly?” She said she wasn’t sure, but she just felt like that would make her comfortable.


At the end of the day, humans need to feel safe and secure. It’s one of our very basic needs. Over your lifetime, this amount of money will change.


For now, determine how much money in your bank account would make you feel safe today. It could be an exact amount or within a range.


So, how much cash do you need in your bank account to sleep soundly at night?


Question 3

What’s the average amount of your monthly expenses?


For many people, this is the million dollar question because most people don’t know how much they spend each month. Some people don’t even want to know!


You should know your monthly expenses to help you figure out how much money you need in your emergency fund. Generally, I follow this method:

  1. Look at your bank account bank and credit card statements.

  2. Add up all of your bills from last month.

  3. Use this amount for your monthly expenses.


Although, everyone’s monthly expenses are a little different. I use a more detailed method to help my clients determine the exact amount they need in their emergency fund on an individual basis. For now, let’s use the sum of your entire last month’s bills as your monthly expenses.


Now, look at the last three months of your statements. Add these months up to get the average amount. This figure is a more accurate representation of your monthly expenses.


Let’s briefly review the three questions again:

  1. In the event that stopped working today, how many months will it take you to find your ideal job?

  2. How much cash do you need in your bank account for you to be able to sleep soundly at night?

  3. What is the average amount of your monthly expenses?


Now, that you’ve answered these three questions, let’s put it all together. Use this formula:


( # of Months X Average Amount of Monthly Expenses ) + Cash Required in Your Bank Account


Even if you stop making an income, you’ll still be paying for your expenses. You have fixed expenses, like your mortgage, car loan, home loan, electricity, etc. You also have variable expenses, like food, transportation, etc.


Here’s an example:


( Number of Months X Average Amount of Monthly Expenses ) + Cash Required in Your Bank Account


  • Number of months = 3

  • Average amount of monthly expenses = $10,000

  • Cash required in your bank account = $30,000


$30,000 + $30,000 = $60,000


Therefore, someone who spends $10,000 a month and takes 3 months to find their ideal job needs $60,000 in their emergency fund.


What is the number that you need in your emergency fund?


Do you have this amount? If not, how much more do you need? How will you accumulate this money? How long do you think it will take you to get it?


Do you already have this amount in your emergency fund? Do you have extra savings in there? If so, take the excess amount and use it to invest into long-term assets.


If you have extra savings, you can use this money for riskier investments that give you a higher return. This will help your long-term investing strategy.


Safe investments shouldn’t have a huge devaluation in its value. In Singapore, some of these investments include a savings account, fixed deposits and government bonds.


If you’re in another country, you should look into your government bonds or big company bonds. Look for companies that are more mature and stable.


Just remember: the higher the risk, the higher the returns. The lower the risk, the lower the returns.


Ensure the money you use for these instruments are safe because you need to keep this money liquid. Remember, your emergency fund needs money that’s easily accessible and there’s no devaluation of its value.


Congratulations! You’ve completed an important step in your journey to becoming financially independent.

🌟 If you’re ready to become financially free, please visit www.ExpenseConciergeSolution.com to book a 15-min consultation with me.


If you’re still considering whether you’re ready to work with us, you can download our free guide The 5 Critical Steps to Financial Agility.


Break free from worry and achieve financial security.


Become financially free! 💸