Every personal finance column tells you to save “three to six months of expenses.” I spent eight years reading other people’s financial lives and I can promise you: nobody who survives a job loss budgets in months. They budget in events, and events have prices.
My emergency fund is $6,400, sitting in a high-yield savings account at 3.80% APY. It is not three months of my expenses — my fixed floor is $2,452/month, so three months would be $7,356. I chose $6,400 deliberately, by pricing the four things most likely to go wrong in my life and summing them.
The four failure modes, priced
| Failure mode | What it costs me | Source |
|---|---|---|
| Car dies (2016 Accord, 148k miles) | $2,400 worst-case transmission work | Two quotes from independent shops, Nov 2025 |
| Layoff gap | $2,452 fixed floor × 1 month | My January 2026 ledger |
| ER visit, in-network, deductible not met | $1,150 | My plan’s out-of-pocket exposure before coinsurance |
| Apartment surprise (broken fridge, lease fee) | $400 | Twice in four years: $310 + $90 |
Sum: $6,402. I funded it to $6,400 and stopped.
Why not six months
Because a six-month fund for me is $14,712, and the marginal dollars between $6,400 and $14,712 earn more in my Roth IRA — where $9,000 invested at the market’s long-run rate roughly doubles before the extra “insurance” would ever be claimed. The emergency fund’s job is to make the first two shocks non-events, not to insure against a scenario my unemployment history says has maybe a 5% annual likelihood.
I was laid off once, in 2020. It took eleven weeks to land the next role, and my unemployment benefit covered $1,740 of the $2,452 floor each month. That’s the real data point behind the “one month of floor” line above — the gap was $712/month, and eleven weeks of it was $2,373, close enough to one full month of floor that I sized to the simple number.
Size the fund to your failure modes and their prices. “Three to six months” is a number someone else chose for someone else’s life.
How I built it
$200 per month, automated on the first business day, for 32 months. No windfalls, no skipping. It finished in March 2025 and hasn’t been touched since — the fridge incident was covered by the same month’s variable spend, which I’ll count as the floor’s goodwill.
If you want to build yours the same way: list your three most likely shocks, price each one honestly (get the quote; look at your plan’s out-of-pocket maximum), sum them, and automate the division. My line items are above so you can see exactly what honest looks like.