Opening Your Umbrella: Why Having Both an Emergency Fund and Mattress Money Can Save the Day

One thing I’ve learned to plan for is he unplanned. Life never fails to happen—right in the middle of a savings period, a car will break down or the roof will leak. Sometimes, things will seem worse. If you are working for someone else, sometimes a layoff will come and income will be cut for the household.  Unfortunately, these surprise expenses don’t mean bill are cut to make up for the financial hardship. So how do we make up for the difference?

Here is where the emergency fund comes in. Financial gurus have, for years discussed an emergency fund as including three to six months of living expenses for you and your family. As someone who comes from a household (with children) supported by a single income, I always recommend having at least eight months of expenses saved in an emergency fund, saved in a series of Certificates of Deposit (CDs). These CDs can be provided by your local bank and set up in a ladder so that they mature at various intervals.

Interest rates on CDs usually are about equal with inflation. You will not make money on this account, but it is not there to make money, it is there to save your household in the event of an emergency. This is not pizza money, and this is not get-your-hair-done money. This is unexpected roof leak money, and lose a job money. The goal is never to have to touch the emergency fund.

Mattress Money

I grew up in a single parent household that was saved more than once by mattress money. When things got rough and the bank account went slim, this account ensured that the mortgage was paid in spite of a lack of income or an unplanned expense that may have exhausted the emergency fund.  Because we relied on my mother’s income alone (outside of what money I could make to assist her with household expenses), this money helped to ensure a sense of security when things felt a little less than secure.

Now, mattress money isn’t tens of thousands of dollars sitting in a cut-out mattress, or uncounted one-dollar bills, crumpled in a shoebox and collected from the bottom of your purse.  This is a deliberate fund of at least one month’s mortgage or rent saved in cash, somewhere safe and easily attainable (that you can grab in an emergency) kept nearby. If you want to be extra safe (conservative), you can save a full month of living expenses instead of just mortgage or rent money, and this will be your ninth month of expenses saved. If this is still confusing, think of it like this: if life were a gangster movie, this would be your go-bag money— your money kept under the doghouse, in a home safe, or in a water bottle saved in quarters— so that if something were to happen and your emergency fund were to be eliminated for some reason (if accounts were seized and banks closed like they were in Greece, for example) that you might be able to eat. I have a Jewish friend whose Israeli mother saved $30,000 in mattress money. When asked about the stash, she said “you never know when the Nazis are coming.”

Which do you save first?

Given the nature of the emergency funds, I always suggest prioritizing setting up the go-bag before any and everything else, including paying down extra money on debt.  If you were forced from your home, cards and banks were no longer an option and your stashed mattress money was all the cash you had to fall back on, you would find a way to survive.


Do you have both an emergency fund and mattress money? What safety net system makes you feel most secure?

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