have 3 months worth of salary in my emergency savings fund

I’m putting $100 into a savings account with each twice-monthly paycheck.

41%

So all that money you’ve got saved for an emergency that may never happen should be working for you, in the meanwhile. I recommend putting it in a high interest savings account (or money market) or investing it in a 5 year CD ladder (as long as you’re allowed to redeem it early for not more than a tiny penalty fee).

Anyone who was invested in the stock market in 2000-2001 can tell you that money there can evaporate overnight.

I’m still on target, I’ll be done by December for sure.

26.5% of my target saved, and if you include the shares (which I could easily sell in an emergency), it jumps to to 37% of my target. Of course, my aim is to get to 100% in instantly available cash, since the share value will no doubt fluctuate too much to rely on it.

Getting there.

I started down the three months salary goal about this time last year. At first I just wanted one month’s salary, then it went to two, and now I won’t be satisfied until I have three.

To be honest my calculation is a bit different thank yours in that I’m basing it on 3 months worth of expenses, which comes out to about 80% of my net salary (paying off some debt at the moment) with the rest normally going towards savings.

My method has been two fold. I follow the “pay yourself first” model and when I write my paycheck I round to the nearest increment of $50 and leave the rest in my account, so that accumulated. I also have an automated withdrawal of $50 each week.

Now I just need to figure out how to invest that money while keeping it reasonably liquid.

...that the completion terms of this goal could alter if I were to receive a payrise, even though my expenses wouldn’t increase (I would just save mo’ money, mo’ quickly).

So, on that basis, I’m going to cap this goal to be £X,X00, based on salary at the time of setting the goal. Of course, I’m not expecting a payrise anytime soon, but stranger things have happened!

This turned up in my blog reader this morning, and I thought I’d share it.

Interestingly, my calculations for 3 months worth of expenses turned out to be the equivalent of one pay cheque for me. That means that completing this goal would give me 9 months of emergency funds, which is pretty good. I suspect that’s not wholly accurate, and I was probably underestimating my transport costs (I just made rough guesses rather than looking them up). Also, I ignored “other debt” repayments since I won’t have any after March.

A reasonable start.