This Is Better Than An Emergency Fund 

This method of budgeting has really worked for me. I'm 71 and on Social Security which because I am relatively healthy I was able to delay until 70 so maxed out the amount I am eligible for which covers all my bills and sinking funds. House is paid for. Car is paid for. No credit card or other debt. My 'emergency fund' is in a HYSA but is budgeted out six months in YNAB including the major expense catagorie you mentioned: Car maintenance, home maintenance, and medical expenses. I also have an off budget account for car replacement and a joint account that I gave my son access to that I call my 'burying money' so my children don't have to wait for death certificates or anything else to do what ever they decide to do after I'm gone. I appreciate y'all and have really enjoyed following your channel over the years. Your videos have really helped me with YNAB and budgeting. Thank you.

Interesting take but will respectfully disagree on this approach for my sake; I'm usually one for the nerdy numbers games but this is way too micromanaged for my liking. I have 6 months of expenses saved in one checking account and we only pull from it whenever an unexpected event happens that we cannot fit in our monthly budget (i.e. storm takes a fence down, roof damage from a storm, replacing an engine in our son's car b/c he wasn't checking the oil, etc); we then budget the next month or two to replenish it with what our budget gives us. Other things like new tires for a vehicle we budget that in the following month or temporarily add to the emergency fund as a sinking fund to use in 1-2 months.

having just been laid off, and it taking over 8 months to find a new job I have started to prioritize my "Income Replacement" category I have a group called "Emergency Funds" and in there is Income Replacement, Puppy Care, Dental, Deductibles, Unexpected Replacements

Ahhhhh I had heard this called "sinking funds" before your vid. That you would setup a "bucket" and put money in that "for a rainy day". Your explanation is much better IMHO

My emergency fund is for 2 things: income replacement (i used it before for that purpose) when I get laid off, and funeral expenses for a loved one. For psychological reasons I don’t dare to have a separate category in Ynab (now transiting to Actual Budget by the way) for the second. So i just use the generic Emergency fund category

In my YNAB, after so many years of using it, I’ve encountered several “emergencies “….so, over the years I have set up very specific budget line items, from cars to appliances to home to health. But I also have a nebulous “emergency fund”, too. I have a big chunk of cash in the fund…I draw out of it to populate specific sinking funds when something comes up unexpected and to cover any shortfalls.

Provocative title, and this idea resonates with me the whole time. I like that you place importance in critically thinking the purpose and parameters of the emergency funds. First time viewer, but in a way I already follow your system. I especially appreciate the example of the stable and single 20-something having 1mo savings + invest the extras. It seems also that you are implying that for one year, I can do this; then the year after, adjust as things come into my life. Segmenting life to more than just whole decades, like a savings account has more than one segment.

Great to see you here. You are best.

I call it a cash reserve,i am retired and have 5 years worth,to replace my investment income only for down markets.Pension income is a constant stream of income.Having said that,your cash should still be working and not under your mattress.When i was working,i had 2 years of cash,that would completely replace my income,plus term life insurance.I was self employed so those last two were important for my family.

I started doing something similar. B/c I agree "emergency" is way too vague.

Thanks, this is essentially the way my current YNAB budget configuration has formed the past few years. $3,000 basic, undefined small emergency budget, only used when some sinking fund just wasn't enough. Otherwise, sinking funds for either expected expenses such as vehicle replacement or maintenance, or funds with a floating balance to ensure something is covered, such as medical expenses. My only concern is, since I'm now retired and able to draw upon retirement accounts, that I would have been maybe better off with the sinking funds delineated in a retirement account earning a better rate of return rather than placed in a high interest savings account (brokerage settlement account). In the end, though, it's worked well: I haven't yet drawn from the retirement account but only from the lower earning high interest settlement account.

Thank you for this, because I don't think people realize this. For myself, I'm currently building my emergency fund, with about two months saved so far, aiming for six. This is strictly for covering bills in case I lose my income. I also have a short-term savings fund for unexpected expenses, like when my headphones broke last night-pulling from that instead of my emergency fund. Im also working on a medical fund and future car expenses along with a tech fund (😅 the tech fund didnt have anything in it as im still working the budget out)

Love this video, being specific about what you're saving for is great advice! The four emergencies you list are predictable enough to be True Expenses. If I'm permitted a word of feedback, why so many categories? No brain can balance that many priorities.

Good idea to budget for the deductible(s).

"Is this a brand where, whenever I take it in the shop, it's going to be $1000 every time?" So, you mean any car then. ;-)

Hi Nick, I have been following you for a while and you helped me setup my YNAB budget through your videos. I noticed in the video you still have a Savings account. I do have a Savings account with just $300 in it. This is just to keep the minimum balance (or get hit with a fee). I do contribute when I have some money add to it...but are you saying we shouldn't have a Saving Account and add budget categories to the checking account. This way we would have dedicated amount of money for the these categories

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