Reality Check

Does 3 months salary in an emergency fund sound like a lot of money just doing nothing?

This is true. However, in our personal experience we found that what money we managed to save in the early years of our marriage always managed to get spent on something. We really didn’t pass the 3 month mark without spending it on something until we had been married for something on the order of 14 years. First it was education and cars. Then it was buying our first home. Because we saved money that we didn’t know was our emergency fund, we were able to pay for everything but the house without going into debt. That is a major blessing. A couple of time we were really close to the line (under $1,000 in savings) but we made it.

I try not to spend a lot of time on big numbers or long time periods when writing this blog. I fear some readers might find it discouraging. However, if you think 3 to 6 months take home salary in an emergency fund is a big number, consider these numbers.

$31,252 Average Cost of a New Vehicle

$25,200 Average Cost of a Wedding Excluding the Honeymoon

$5,219 Average Cost of the Honeymoon

$241,080 Average Cost of Raising a Child (Excluding College)

$270,200 Median Cost of a Home

$216,000 Approximate Cost of a Four Year Degree from Furman University

$60,000 Approximate Cost of a Four Year Degree from the University of South Carolina (In State Commuting Student)

$1,000,000 Amount of Money Required for a $40,000 a Year (4%) Annuity in Retirement

Avoiding debt is the single best personal financial goal for any young couple. An emergency fund is the first step towards making debt free living a reality in your life. Deferring gratification by saving and paying cash for your goals with save quite literally hundreds of thousands of dollars over an average American life of 78.5 years.

If you persevere, some day you might be able to use some of that money to pay for your grandchildren’s college education. Wouldn’t that be wonderful!