Question

What are some instances where less than the commonly recommended emergency fund benchmark of 3 to 6 months may be appropriate?

Answer 1

Instances where less than the commonly recommended emergency fund benchmark of 3 months to 6 months may be appropriate are those instances in which an individual has already created a pool for different scenarios. For instance an individual may have already created a pool of emergency fund for job change or a career change. Job changes entails a brief period of being not employed and so if an individual has already created a pool of fund for this then his emergency fund can certainly be less than 3 to 6 months’ benchmark. Also an individual may have created pools for medical emergencies and may have ample amount of medical insurance then his emergency fund can be less than 3 to 6 months benchmark.

Another instance is when an individual’s income is high and the individual is able to save a large proportion of his income then his emergency fund can be less than the benchmark of 3 to 6 months.