Congratulations on Saving 6 Months to 1 Year of Expenses!

A fully funded emergency fund means you have 6 months to one year of expenses socked away! If you’ve reached this milestone, congratulations! This likely took you years of hard work and you should be proud. Well done!

A fully funded emergency fund at 6 months or more should give you a sense of independence!

If you’ve followed the other guidance in your MoneySwell plan, your fund is sufficient at this point. You’ll only need incremental “top ups” to your emergency fund. These will help to account for inflation, lifestyle changes, or replenishing your fund after emergency spending.

If you’re wondering what to do with money you’re no longer putting towards your emergency fund, consider the investment suggestions associated with funding long-term savings. Investing is more volatile than the safety of funds in a traditional bank. But in the long run they’re likely to get you a far better return.

Don’t forget: By having a fully funded emergency fund like you do now, it will allow you to ride out the volatility of your other investments and still feel comfortable – even when the market is taking a hit!

Finally, for a refresher on emergency funds, check out “How much of an emergency fund should I have?” It covers expenses you can use your fund for, the value of building it in stages, and other benefits your fund provides.

Suggested Reading

In the book The Psychology of Money, Morgan Housel does a great job describing how having a solid emergency fund allows you to ride the ups and downs of market investments with confidence.