What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund?
Here's a few. Is this what you're looking for? Also this should probably be a community wiki. "Some things are nearly universal, and have been mentioned already.  My ""favorite"" forseeable expenses in this category are: However, I also advocate saving for expenses that are specific to you.  Look back on your expenses for the last 12 months, minimum (18 or 24 may be better).  Ask yourself these questions: I ask about large expenditures because you may make enough that you can ""eat"" these lapses in budgeting, as I did for many years.  It is not an emergency now, but it turned into an emergency down the road as my spending went out of control.  Look at all expenditures over a certain level, say $100 or $200.   Some personal examples of expenses that aren't quite so universal, but turned into small emergencies: This last one was rather unexpected.  It is the reason why I ask the question ""why didn't I budget for it?""  These fees and dues are for my professional-level certifications.  In my industry, they are ""always"" paid for by the company.  A year ago, they weren't paid by my former employer because they planned to lay me off.  This year, they weren't paid by my present employer because I am technically a temporary worker (4 years is temporary?).  So, from now on, I plan to save for this expense.  If my employer pays my dues, then I stop saving for the expense, but keep the money I've saved." "Annual property tax and home insurance come to mind as things that are easily forgotten, but surely the biggest true, ""I didn't see that coming,"" is a major car repair. There are a number of things that can go wrong with a car with little warning and end up costing a thousand dollars or more.  Since most people are dependent upon their car for getting to work, doing anything but fixing or replacing the car is not an option.  If you fix it, that's an out of pocket expense that most aren't prepared for.  If the car has some age, you might be inclined to replace it, but doing so in a rush costs a lot more than taking your time in such a decision." The way you ask this is interesting, it implies (quite correctly) that for many, an annual bill for house insurance, property tax, etc, can turn into an emergency. My answer to the true emergency is a breakage that can't be foreseen (although you have to know the furnace isn't going to last forever) or a medical bill that's not covered (our dental is limited and the Mrs root canal can be $1000 out of pocket) insurance premiums  My annual car premium always caught me off guard until I set up a dedicated savings account for it. Extended illness/disability that prevents you from being able to work. Edit: Leigh Riffel: So, why should this be expected, and how should it be planned for? Some of us may be fortunate enough that this never happens, but I've known enough unlucky people to have seen that it can and does happen. Prepare for it with: While it is true that homeowners insurance will cover emergencies, it is very important to check and make sure that your policy is covering everything that it needs to. A great example is what happened to all of those without flood insurance in Tennessee last year. You may opt not to get additional coverage, but then you should make sure that you are setting aside funds for such a catastrophe. The most obvious one these days is unexpected and extended unemployment. If you are living paycheck to paycheck, you are asking for trouble in this economy.
Thank you for your service.  My first suggestion since your car is a planned for the near future is keep that amount in savings and just pay cash. There are plenty of attractive offers to entice you to finance your vehicle but there really is no compelling reason to do it considering the savings you have.  Second I would keep an additional portion of savings as a rainy day emergency fund. How much is based mostly on what you feel comfortable with. The number of possible emergencies that can come up is limited and your expenses are limited which is normal given your age. This fund might be for something such as emergency travel for a sick family member, cover a deductible for an auto accident, whatever unforseen event might occur (hence the name emergency fund). What investments you are comfortable with will be determined by risk tolerance. While in the military individual stocks that are aggressive risky investments may not be a good idea because of the extra attention they require and you can't really babysit a portfolio while deployed but there are many good low or no cost mutual funds or ETFs that you could get into.  I would look into setting up a recurring purchase with a set dollar amount monthly so you will continue to accumulate whatever option you are investing in regularly even if you are deployed. Which fund or ETF you pick will depend on your goals and risk tolerance but you could very easily pick several for diversity. Good luck and thank you again for your service. "The guideline for the size of an emergency fund is just a guideline.  I've usually heard it expressed as ""3 to 6 months,"" but everyone has a different idea of exactly how big it should be. The purpose of the fund is to give you enough cash to be able to pay for unexpected expenses that have come up that you have not budgeted for without you having to borrow money to pay for them. To figure out how big this fund should be, we look at the worst case scenario.  Suppose that you lost your job tomorrow.  What would you do? Cut your expenses.  You'd probably be much more careful how you spend money. Secure health insurance.  This would be done by either continuing your employer's policy with COBRA, or by purchasing your own insurance, likely through the Obamacare/ACA market.  Keep in mind that most likely your employer is paying for a portion of your insurance now, so this expense will go up quite a bit no matter which option you choose. Look for another job.  You'd probably begin your search for a new job immediately. The size of your emergency fund determines how long you will be able to go without income before you need to start a new job. Regarding cutting your expenses, it is up to you how much you would cut.  There are things that are easy to cut temporarily (or permanently), such as restaurants, entertainment expenses, vacations, etc.  You would probably stop retirement investing until you have income again.  The more you cut, the longer your emergency fund would last.  Things you don't want to cut are necessities, like housing, groceries, utilities, transportation, etc.  I would also include health insurance in this list.  Certainly, if you have a pre-existing condition, you do not want to let your health insurance coverage lapse. Your employability is also a factor.  If you believe that you would have an easy time finding similar employment to what you have now, your emergency fund might not need to be quite as big as someone who believes they would have a harder time finding another job." I've read the answers and respect the thought behind them.  I'd like to focus on (a) the magnitude of the emergency, and (b) the saving rate of the people affected. 3-6 months is interesting. It's enough not just to fix the car, repair the A/C, etc, but more than enough to lose one's job and recover. (Let's avoid the debate of how long it take to find a job, no amount of 'emergency savings' can solve that.) If one is spending below their means, any unexpected expense that can paid off within, say 3 months, doesn't really need to tap emergency funds (EF). And, at some level of income and retirement savings, one can more easily run a much lower EF.  My own situation - I had 9mo worth of expenses saved as EF. We were living well beneath our means, and I was looking at the difference between our mortgage (6%+) vs bank interest (near 0%). I used the funds to pay down principal, refinanced to a lower rate, and at the same closing got a HELOC. The psychology of this is tough, it then appears that for simple expenses, I'd be borrowing from my HELOC. On the other hand, the choice was between a known cost, the $5K/year the money was costing by sitting there plus the lower rate by going to a non-jumbo loan at the time, vs the risk of using 3% money from the HELOC. In the end, the HELOC was never tapped for more than a small portion of its line, and I never regretted the decision. Ironically, it's the person who isn't saving much that need the EF most. If you are a saver, you need to judge how long it would take to replace the funds.  I offer the above not as a recommendation, but as devil's advocate to the other excellent advice here. All cash flows are a choice, $100 going here, can't go there. I'd slip in a warning that one should capture matching 401(k) contributions, if offered, before funding the EF. And pay down any high interest debt. After that, the decision of how liquid to be is a personal choice, what worked for my wife and me may not be for everyone. You will find lots of rules of thumb but there is no universal truth to how much you should save. There are factors you DO need to consider though: you should start as early as possible to set money aside for retirement. You should then use a retirement calculator to at least get an understanding of the amount you need to set aside each month to achieve the desired retirement income; your default should be not to spend money and only spend money when you must. Leisure, travel and eating out should come last after you have saved up; you should have funds for different terms. For example, my wife and I have an emergency fund for unexpected expenses or losses in income. The rule of thumb here generally is to have 3-6 months of salary saved up. A longer term fund should be created for larger expenses like buying a car or preparing the cashdown on a property. Finally, the retirement fund which should cover your needs after you have retired. At what point can you not afford the repair, and how will that repair affect your home? In your scenario, you would be claiming $1, which I could agree is universally bad. A good tip is to raise the deductible to the point you feel you can cover on your own so you aren't tempted.  (It would lower your premium too) This is what an emergency fund is for.  In your examples, if you have $10K in an emergency fund, don't file a claim.  If you have no emergency fund, and your roof is missing, I would suggest filing a claim. If you have no money, but the claim is to fix something that you could ignore (missing a back porch?  Lock the back door and don't go out of it) then save the $10K and pay for it out of pocket. When it doubt, pay for it out of pocket if possible. Tell me how many times have you gone to the ER? Point is 99% of hospital visits are for non life threatening situations; teeth extractions, allergy test, antibiotics, sprained ankles, etc. Routine healthcare/Non emergency treatment is what i'm assuming the POOR do not have access to. Also don't need as much of an emergency fund though. The risk of having all of your assets tied up in a 401k is way higher when you're out on your own.  But yeah. I would hope that anyone living at home is saving aggressively. We aim to keep 6 months of expenses. The rationale is that its enough time to recover from most serious illnesses (that you can recover from) or a redundancy or pay for a large unexpected problem not covered by the insurance (e.g. the boiler dying). It also gives us enough time to reorganise finances if needed. For example we could get out of contracts (like mobile phones, sky TV), sell the car, and maybe even find a cheaper house if needed in that time. It will take a good chunk of time to build up that amount and it's worth considering how many commitments you have (kids, wife, mortgage, car...) as the fewer you have the less you need. If you have fewer commitments you can be comfortable with much less contingency. When I lived in rented accomodation and didn't run a car or have many possessions, I just maintained enough cash to cover my bills for about 6 weeks, this would give me enough time to find another job, and if I didn't get one I could always crash round a friend's house.