I have both an emergency fund and an “unexpected big expenditures” fund. I’ve been trying to treat my emergency fund as for true catastrophic emergency, like we both lose our jobs or something. I have enough in there to last us about 6-8 weeks if we had no income at all. I am trying to treat that as entirely inviolable absent serious catastrophe where we suddenly had no income, not just “the dryer went out and we need to fix it or get a new one.”
Instead, that stuff is for the category I’ve marked “Unexpected Big Expenses.” This is kind of our slush fund for envelope shortfalls that we couldn’t see coming and don’t neatly fit into any particular budget. This is the dryer went out, or a window broke, or my kid needs money for a field trip. This month, I expect we’ll end up using it for stuff for a party after our youngest’s baptism; I can reallocate it to groceries and other categories as needed to cover shortfalls. I budget for things like home repair, but if that envelope hasn’t built enough on its own, this can take up some slack.
I modified the Savings Budget template to calculate out how much money is already allocated to the digital “envelopes” and flags overspending. At the end of the month, if we have “available unallocated” funds, I have been moving at least a portion of that if not all of it over to an “Unexpected Big Expenses” envelope.
So far this year, that’s covered a dryer replacement and a moderate car repair (would have cost me $800, but I managed to save $650 doing the labor myself). Two years ago, before I found Tiller and before I was managing the budget, these expenses could have broken us or put us into serious financial stress. Now, I wouldn’t say they’re no big deal, but we can handle some hits and be ok.