A post over at Free Money Finance about growing your net worth, got me thinking about my emergency fund. I had sorta forgotten about it – in a good way, because I've had it running on autopilot for the last several months. I have my direct deposit split so that $200 per paycheck goes into my emergency fund account, and the rest is split among other budget categories. It's nice to see that I'm now about 30% toward my goal (I updated the meter on the right).

Looking at the balance of my account also got me thinking about my goal. Right now my goal is $12,000, which represents about six months' worth of expenses. Or at least, it did when I set the goal back in March or so. Since then, some things have changed. There are some monthly expenses I don't have to worry about any more, but there are others that I do (or soon will have to) need to add into my calculation for an emergency fund.

Below is a quick analysis of the various regular expenses that have changed for me in some way. The numbers in parentheses are the approximate six-month cost for each expense, and they correlate to increases or decreases in my emergency fund goal amount.

Please note that this is basically an academic exercise, since it's likely I'll need at least $12,000 for a six-month emergency fund. Since I'm nowhere nere that figure yet, I'll just keep saving like I have been.

Internet, phone and cable (-$750): Over the summer I canceled my cable, and I haven't looked back. Plus, I recently realized that my employer will reimburse me for my VoIP phone and Internet access charges. In an emergency, if I was still employed I could continue to be reimbursed for these things, and if the emergency was losing my job then I would just have to suck it up and cancel them (the phone wouldn't be hard to get rid of, but the Internet would). So I can remove them as considerations from my fund goal.

Cell phone (+$700): I have a cell phone that I use as my primary personal phone. Right now, my ex-wife is paying for the service access until the contract expires – in December. After the first of the year I will need to get a new plan and begin paying for it, if I want to keep a cell phone. I like having a cell phone, and in fact I am hoping to get some kind of smart phone (I really like the Droid), which will mean paying for a voice and data plan. I'm using the "average usage plan cost" of $110 from Bill Shrink's smartphone comparison grid as the basis for this amount, but hopefully I will be able to go with a smaller plan (plus I get a discount from my employer).

Car insurance (-$300): While my ex-wife pays for my cell phone service, I pay for her car insurance. When I take my cell phone bill, she will take her insurance payment.

Food (+$1,200): Okay, I am a little embarrassed to admit that my current emergency fund goal does not provide for any food. Apparently, I thought I could live off my stored fat, like a bear in hibernation. Anyway, I'm picking $200 per month in food, which seems like plenty if I avoid restaurants and take full advantage of sales opportunities.

Gym (+$60): My gym membership will expire at the end of the year. For this year, I was able to get a deal for a year-long membership for $99. The normal price is $10 per month (plus an annual fee of $25); hopefully, though, I will be able to get a similar deal this year.

Daycare (-$1,000): I pay for daycare for my two daughters. When my ex-wife moved over the summer, the cost of day care decreased by nearly $500 per month! That said, reducing my emergency fund by $3,000 seems a bit much, so I'm just reducing it by $1,000 based on this consideration. Having a little extra won't hurt.

The new goal

So, taking my old goal and doing the requisite math, I can come up with my new goal. Here's how it looks:

$12,000
-$750
+700
-$300
+1,200
+$60
-$1,000
-------
$11,910

Wow! I didn't actually expect it to be lower, albeit only slightly. And that's with being conservative on the daycare numbers.

For the most part, it doesn't seem worth it to even change my goal at this point. I will need to do some more reassessment after the first of the year, when I know the actual numbers for things like my cell phone bill, car insurance, etc. But for now, I'll keep stashing my $200 per paycheck into my emergency fund and hope I don't have to use it anytime soon.