How Much Do Physicians Need In Their EF?
Considering the job security most physicians enjoy it would make sense to advise physicians to have smaller emergency funds. I will make the assumption here that if you have a dependent spouse or offspring that you have adequate life insurance in case of your demise. I will also assume that you have disability insurance. Ideally you would have a very detailed disability insurance but at the very least I’m assuming you have the group disability offered by your employer. I think WCI has covered disability insurance from every angle imaginable.
The Purpose of EF
The purpose of an emergency fund is to support you financially should you lose your job or should you encounter a personal financial emergency. A family member may get sick, you may get laid off, you may get incarcerated, you may lose you housing, you may have a health emergency, you may decide to suddenly leave your current job etc. One also should consider less imaginable emergencies such as massive power outage, massive chemical disaster, massive natural disaster, massive biologic attack or other enemy attack as well as a massive food and supply shortage. In some of these of course cash in the house, cash on person and cash in the bank.
Different Categories of EF
Having 3x, 6x, or 12x your monthly expenses in an account certainly wouldn’t cover all the scenarios above. I’m certainly not trying to make you paranoid but just like we practice mock codes for worst case scenarios and stock the crash cart accordingly we should do the very least for our own personal lives.
Therefore, an EF includes cash on one’s person, a $100 bill hidden in your sock… I don’t know get creative. A larger cash amount would need to be stored somewhere within one’s home/work place/vehicle. One needs some money accessible at a bank that’s FDIC insured.
I will include food stores, disaster preparedness supplies and items that can be bartered in my EF scenario. I realize that ‘funds’ refers to a monetary collection but if stores are closed/destroyed/unsafe then what good is money?
EF Proposal For Physicians
As a physicians you have a very valuable service you can trade. A farmer, a mechanic and a carpenter are right up there with doctors. As a single physician (with no spouse to support you in case you get the pink slip) you should have 6 months of basic expenses saved in an FDIC insured checking or savings account that’s accessible without any penalties within 1-2 business days.
You can be late on a mortgage and you can default on debt and even file bankruptcy if the emergency is bad enough. Your ‘basic’ expenses therefore include rental housing, food, utilities, cell service, and health insurance. I would guesstimate these to be in the $2,000-3,000 range. If you carry a larger expense burden and have adequately paid down your debt and started saving you can certainly try to match your currently expenses. So, if your current expenses are $5,000 then stash away $30k. If you have a lot of debt and don’t have enough to contribute to retirement funds then save $12k and worry about the rest of the ‘basic expenses’ later.
Furthermore, this single physician could have $100-300 cash on her/his person ideally hidden somewhere. There should also be another $3,000-5,000 hidden somewhere within one’s home or other accessible location. And lastly, stock up on food cans, matches, drinking water and paper towels and plastic bags. If you wanna take this to the next level then also stock up on alcohol and cigarettes (again, this is really stretching but use your imagination; apparently a great barter tool).