PART 3 - Secure Your Future with Your Emergency Fund in the Personal Budget App

If you are fairly new to setting up an emergency fund then the general approach is to try and start it off with a minimum balance straight away (for example, $2,000) to cover the worst of emergencies, and then over time build it up to three to six times (or more) of your monthly expenses to give you a financial safety net.

They all work the same way in the personal budget app, so the name you choose comes down to personal choice and it doesn't matter which you go with.

My preference is Safety Net (as it reminds me of the old circus acts where acrobats would fly around and the safety net would help them bounce straight back if something went wrong!). If you are following The Barefoot Investor then you can choose Mojo. The most common name is an Emergency Fund.

However, the emergency fund account is also linked to your Wealth Goals so as well as seeing historical balances, you can see the future and how long it will take to create and then top up to your three to six times expenses (or other target you set).

This is all done for you automatically for you by the personal budget app and we will go through an example of setting up Bob & Jill's emergency fund below.

MoneyFormula gives you two wealth goals to help you create and top up your Emergency Fund.

Let's go back to Bob & Jill's current goal list in the personal budget app and all we have to do is pick the two emergency fund goals.

Looking at the wealth goal summary we can now see the four goals listed. The two new emergency fund goals and the two existing debt goals we already set up in the personal budget app (refer back to PART 2 - MoneyFormula Wealth Goals for details on setting up the debt goals).

To fix this, all we have to do is navigate to each goal in the personal budget app and set a Target amount.

Bob & Jill are going to start with a fairly small amount as they just want to get up and running, so we will set the target on the Create Emergency Fund goal to $250.

When we save the Emergency Fund Target, MoneyFormula instantly shows us it will take 6 months to achieve our initial Emergency Fund balance if we were to use the $50 a month and the chart show the goal progress.

One of the options Bob & Jill are considering is to sell some items around the house to speed things up so they don't have to wait the six months.

If they choose to do this then each time they sell something all they have to do is update the Emergency Fund balance in the personal budget app and MoneyFormula will automatically recalculate the new end date and time required.

Once we set the second target the chart in the personal finance app shows us the combined progress of both goals and we can see it will take 1 year and 9 months to top up their emergency fund.

If we go back to the account list in the personal budget app we can see our Emergency Fund has two icons showing us the goals are active.

...and if we expand the account view we can see a summary of the two goals we have just set up and when they will complete

The MoneyFormula personal budget app will automatically track the progress of the goals against the latest balance on the account, so as you enter new transactions or change the balance the goals status and charts will reflect how long you have left to achieve your savings.