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Earlier this week there was a discussion at getrichslowly.org about a poll they had done about emergency funds.

One of the findings was that the amount people were saving in their emergency funds seems to be dwindling over the past 5-6 months.

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After reading that post I started looking for other polls to find out how many people are actually saving up an emergency fund in the first place, and to see what they believe is a good place to get their emergency money.

Poll About Emergency Funds

The numbers seem to vary a bit depending upon the source, however, I found a Gallup poll from a few years back that found only about 4 in 10 Americans say they actually have cash on hand in case of an emergency. Only 10% say they have $1,000 in cash available in case of an emergency.

When you dig a little deeper you find that a lot of people aren't depending mainly on cash savings to bail them out in case of an emergency.

Three in four consumers say they would use their savings account as a money source in case of an emergency. Fifty-six percent say they would use credit cards and 50% would borrow from a relative. Thirty-nine percent say they would use their 401k retirement account and 37% say they would use their home equity account.

So besides cash savings (75%), people say they would use these sources to help pay for an emergency:

Credit cards (56%)

Borrow from relatives (50%)

401k retirement account (39%)

Home equity loan (37%)

Based on the fact that only 10% say that they have $1,000 in cash on hand for an emergency, and the fact that so many are depending upon other ill-advised sources of emergency money, I'd have to say people are in general woefully under-prepared.

How Much Money Are You Saving?

So the question is this – how much money are you saving in your emergency fund? Most experts (like Dave Ramsey) will suggest that you save at least 3-6 months of expenses in an accessible cash account.

Personally I think that's a good start, but at our house we usually fall more on the conservative side of things because of the large number of emergencies we've experienced in the past 3-4 years (hospitalizations, baby, car troubles).

We're currently sitting on a nice 10 month cash reserve in our online savings account, and we're building it to 12 months. With the economy as it is, and with one spouse staying home to be with our son, we just feel more comfortable having a bigger cushion in case something were to happen. And something WILL happen.

Money magazine says that 78% of us will have a major negative event happen in any given 10-year period of time.

Have You Had To Use Your Emergency Fund Yet?

Another question for commenters: Have you had to dig into your emergency fund at any point yet? I'd be curious to know what types of expenses count as an emergency, and just how big those expenses were.

For us we've been in a state of continually renewing our emergency fund over the past few years. First my wife was in the hospital for several weeks, which ended up costing us several thousand dollars after insurance kicked in. Our emergency fund covered it, and we quickly refunded it.

We also had a car that died on us – when the engine decided to give up the ghost. Luckily we had saved up a car replacement fund, and only a small amount of our emergency fund was touched.

Next we had another hospitalization for my wife – again covered by insurance, and then by our emergency fund.

So as you can see – major negative events can and will occur – even frequently sometimes!

How much are you saving for your emergency fund? If you don't believe in having a large cash reserve, how will you be paying for any emergencies that crop up? Have you had to use an emergency fund yet? If you have, what was the emergency? Tell us your thoughts in the comments.



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