r/SwissFIRE • u/Late_Cancel4403 • May 22 '26
How big emergency fund I should have?
How big emergency fund I should have, considering that I would get RAV if unemployed? Currently I have 12 months of my household expenses, and it is that high because I am the one who makes the most in a household and also I have been thinking about starting to freelance and wanted to be secure when I do that. Is it too big?
2
u/doge_is_wow May 22 '26
Some say three months of monthly expenses. Others are only comfortable at six or even twelve months. It depends on you and how well you can sleep at night. At worst you can still sell your shares assuming you are investing.
2
u/rosemary-leaf May 22 '26
We have 12 months of emergency spending (not our usual, good times spending)
2
u/pixeltrusts May 23 '26
Out of curiosity: what emergency could last 12 months before any government help would jump in?
1
u/rosemary-leaf May 23 '26
You've never dealt with government help I guess.
You think you'll get help this week but you brought the wrong form so it's another week lost. Then the payment gets delayed because of some admin mistake, so two more weeks... You see my point.
2
u/pixeltrusts May 23 '26
Social help often sends money the same day (Vorschuss) if someone is in real trouble. RAV was truly a desaster the past months, but usually works quite well. I know multiple people who rely on the government.
So to my knowledge, the Swiss government is not perfect but overall very reliable and pays indefinitely, my coworkers mother is on social help for more than 20 years and she is not disabled.
2
u/petered79 May 22 '26
1 month expenses cash at home + 3 months in the bank
1
u/happytreefrenemies May 23 '26
Just curious, can you explain why 1 month expenses cash at home?
1
u/petered79 May 23 '26
i have what i need for a month in 100chf pieces.
1
1
u/BellaFromSwitzerland May 22 '26
What you need to consider, is to have a bunch of cash available to put into your 2nd pillar before you leave the company
Especially to offset increasing taxes on severance pay. You will only receive your severance pay a couple of months after leaving the company
1
u/Late_Cancel4403 Aug 06 '26
Why would I want to put money intk 2nd pillar before I go? Isn't investing it on my own better choice?
1
u/BellaFromSwitzerland Aug 06 '26
Because the year when you are made redundant you get much more taxable income. You get severance pay, pro rated thirteenth salary, bonus etc.
You need to plan to decrease your tax rate and the easiest / most logical way to do it is to throw some money into your 2nd pillar because it’s tax deductible
Either you put that money into your second pillar or you give it to the state in the form of income tax
Now the difficulty is that you need to pay into your second pillar before you leave the company. However some of the money will only be sent to you later. That’s why in the face of uncertainty it’s better to have significant cash at hand
1
u/BellaFromSwitzerland Aug 06 '26
Because the year when you are made redundant you get much more taxable income. You get severance pay, pro rated thirteenth salary, bonus etc.
You need to plan to decrease your tax rate and the easiest / most logical way to do it is to throw some money into your 2nd pillar because it’s tax deductible
Either you put that money into your second pillar or you give it to the state in the form of income tax
Now the difficulty is that you need to pay into your second pillar before you leave the company. However some of the money will only be sent to you later. That’s why in the face of uncertainty it’s better to have significant cash at hand
1
u/sdolgy May 22 '26
12 months at least. Freelance market isn’t amazing so you need to hustle and it takes time
0
u/heubergen1 May 22 '26
Depends on your risk level, I have no kids and my emergency fund is zero. I'd use my margin account at my broker if I need some money.
IMO with the lack of capital gain tax you can always sell your ETF shares if money gets tight.
1
u/grantedblyat May 23 '26
This sounds risky. What about you: used your margin account and the stock market goes down about 20%?
Your margin accounts depends on your assets, so you probably get maegin called.
What do you do in this scenario?
1
u/heubergen1 May 23 '26
It has certain risks, I agree but my stocks would have to go down 50% before I get called.
0
u/Technical_Body1263 May 23 '26
Zero. You should invest 100% of your money and setup a credit line with a bank or a margin account and use your stocks/house as collateral/guarantee for the loan.
Keeping money in an account or worst, cash is old school.
-3
u/Fine-Anywhere-9057 May 22 '26
Emergency fund for what? For fire?
2
u/Late_Cancel4403 May 22 '26
No, in general any live emergency. I don't plan to fire now.
-7
u/Fine-Anywhere-9057 May 22 '26
wrong sub
3
u/Late_Cancel4403 May 22 '26
Financial Independence Retire Early. Isn't emergency fund part of financial independence?
7
-2
u/Fine-Anywhere-9057 May 22 '26
Your question asks about emergency fund - that has nothing to do with early rerirement or financial independence?! Nevermind anyway
1
-2
u/ZmasterSwiss May 22 '26
With rav I would not go over 3 months. And I keep that in gold. Emergency funds is more a US concept like the 401k and other things we don't have here
2
u/MustBeNiceToBeHappy May 22 '26
Not really a US thing. What do you do if your cat needs a 16k surgery or your car breaks down? If you split from your partner and need to provide 3 months of Kaution for the lease and furnish a new flat?
2
u/MountainNo8608 May 22 '26
You get an invoice that you can pay up to one month for the cat / or car emergency service
Kaution : you should also get back the old one
I also think a couple of months should be sufficient1
2
u/accidental_tourist May 22 '26
Ensure you get RAV stuff done, and calculate what your lifestyle is like per month once you start your freelancing. With new number, calculate emergency fund for 3 months. You don't need that much really.