By Thomas | financial enthusiast

My investing diary: June 14, 2026

I’d always bragged about my tidy 3‑month savings rule, but a sudden payroll tax adjustment made me question if I was under‑buffering. First thought was, “If I’ve been doing this for years, why change?” I had to sit with this because the numbers were staring me in the face.

I pulled up my latest pay stub. A $1,200 tax adjustment meant my net took a bite out of my discretionary cash. I didn’t realise how much of my “extra” was actually a cushion for emergencies. (Works out nicely.)

Why the 3‑month rule feels too tight

I used to think three months of expenses was the sweet spot: not so much that I’d fall into a spending spiral, not so little that a layoff would be catastrophic. But my lifestyle has shifted. I started freelancing part‑time, which introduces unpredictable income. I also moved into a city with a higher cost of living. When my disposable income dips, I panic and shut down my investing momentum.

I did a quick spreadsheet: monthly expenses $3,500, three months = $10,500. My actual emergency fund sits at $9,000. That’s 2.5 months—less than the rule. A sudden loss of a freelance gig would wipe me out faster than I’d like. So I realised the rule was too conservative for my current reality. It wasn’t that I was over‑saving; it was that I was under‑protecting.

How I recalculated the buffer

I decided to raise the buffer to four months. Why four? Because:

  1. Freelance income can dry up within a month.
  2. I want a safety net that covers at least one unexpected major expense (car repair, medical bill).
  3. A bigger cushion reduces anxiety, letting me keep my investment eye on long‑term growth rather than short‑term survival.

I set a realistic goal: add $3,500 to my emergency account over the next two months. That’s a little over $1,500 per month—manageable. I also opened a high‑yield savings account so the buffer earns interest instead of sitting idle.

Should I keep a separate “fun” fund?

Yes. I learned that a separate discretionary spending account can prevent the emergency fund from being used for non‑essential wants. I moved $1,200 from my checking into a “fun” account and capped it at $2,400. That way, if I need to use the emergency fund, I’ll truly be facing an unavoidable event, not a splurge.

I also updated my budget: 50/30/20 became 55/25/20 after the tax adjustment. I’m allocating 55% to essentials, 25% to savings (including the emergency fund), and 20% to lifestyle. (I almost missed this.)

What does this mean for my investing?

With a larger emergency buffer, my anxiety about market dips has lessened. I can hold onto my diversified portfolio during downturns instead of liquidating. The peace of mind that comes from knowing I’ve got a cushion is priceless.

I’ll keep reviewing the buffer every six months or after any major life change. The goal is to stay flexible—don’t let the emergency fund become a static number.

What’s your current emergency fund size compared to your monthly expenses, and how does that affect your investing decisions?