Purpose for This Purpose of the Emergency Fund
When it comes to following standard financial advice, many of us would say that we actually have three to six months’ living expenses saved in an emergency fund ?
It’s a noble goal, but if it’s too complex for your current financial situation, can I suggest another guideline for an emergency fund: your health insurance deductible.
Your deductible is the amount of money you must pay for health care services, in addition to certain prevention benefits, before your coverage expires. According to a report by the nonprofit International Employee Retirement Plan Fund.
This is much less than living costs for three to six months (and your exact deductible will obviously differ), but ensures that if you or a family member has a medical emergency, you can cover (most) of the bills. not relying on a credit card, a personal loan or, increasingly in the dismal US financial ecosystem, fundraising. You will still be on the hook for copays and coinsurance , but at least you can pay your initial bill.
If you have an HSA or FSA, of course use those funds to cover as much of the cost as possible, but don’t include them in your total emergency fund. This way, you will have additional safety net to help pay any unexpected bills .
This number is just a starting point. If a medical emergency is disabling or unable to work, you need to hide more to cover your day-to-day expenses. But this is a good starting point where many Americans cannot afford to pay even a $ 400 emergency out of pocket .