This post is from staff writer Lisa Aberle.

Common personal finance advice recommends building an emergency fund. In fact, how and why to have an emergency fund has been covered here before. But like so much common advice, it doesn’t apply to everyone — and it certainly doesn’t apply to every stage of personal finance.

Sometimes I get financial tunnel vision and focus on my financial checklist (Pay off debt? Check. Have an emergency fund of three to six months’ living expenses? Check. And so on.), and I don’t compare these tasks or goals to my situation. So I appreciate fresh perspectives that make me question my herd mentality. And I got a new perspective from Mike and Jacq on a recent post: They don’t have emergency funds.

That started me thinking. Emergency funds aren’t necessary for everyone. (I mean, who would suggest that Warren Buffett needs an emergency fund?) How do we decide when they are no longer necessary for us? Or, maybe they aren’t even necessary in the first place for some people.

What causes financial emergencies?

According to a 2007 Pew Research article, 34 percent of people experienced unexpected expenses in the prior year.[Source:]

Of those unexpected expenses …

  • … 34 percent were medical expenses
  • … 24 percent were related to vehicles
  • … 20 percent from homes/housing
  • … 9 percent from life events/children
  • The remainder were expenses related to taxes, travel/vacation expenses, pets, and work

I would also add loss of job/income, funeral costs, and legal costs.

Since 2005, my husband and I have had our share of unexpected expenses: a cancer diagnosis, a depressive disorder requiring expensive counseling, seven surgeries, a defective septic system, two car accidents (at the same time, long story), and unexpected car repairs. I’m sure there are more. As you can see, Dave Ramsey is right. It’s not if a financial emergency will hit you, but when.

But back to my list. Of those items, only one felt like a true financial emergency (more on that one later).

Insurance against financial emergencies

So, if emergencies happen to 34 percent of us, how can any of us go without an emergency fund in a nice, little, high-yield online savings account?

1. Calculate your emergency/unexpected expenses. Over the last few years, our “emergency” expenses have been fairly consistent. Our medical expenses, surprisingly, haven’t varied much from year to year, so we allot a specific percent of our budget to medical expenses. Even if we are not planning on surgery, we seem to end up on the operating table with alarming frequency. We also have a car repair fund. Our car is older, and if it doesn’t need brakes one year, it needs tires. Even though our emergencies have been unexpected, they’ve been consistent — which means we can plan for emergencies with targeted budget categories.

2. Be insured. I don’t want to go crazy on insurance. But carrying homeowners or rental, health, disability, life and car insurance give you peace of mind while protecting you from a financial catastrophe. My father’s life insurance policy helped my mother survive financially in the years since his death. Even if you have all these insurance policies, not all plans are created equal. If you have several family members, high deductibles, or an expensive health condition, you probably need an emergency fund — or at least calculate how much you’ve spent over the last few years, divide by 12, and contribute that to a savings account.

3. Secure job/two-income household/multiple sources of income. One of the greatest emergencies is a loss of income. Although loss of income is painful, some jobs are more secure than others. If you are a two-income household or have multiple sources of income, maybe you don’t need an emergency fund.

4. Eliminate debt. If you don’t have much debt, you can better weather financial emergencies. If you have several monthly obligations to lenders, you need an emergency fund.

5. Live below your means. If you practice living on 50 percent of your income, you will be prepared when your expenses go up or your income goes down. When your income far exceeds your expenses, you are in a position to put an emergency fund to work somewhere else.

Why not have an emergency fund?

The biggest reason to NOT have an emergency fund is because you can invest the money somewhere else. When I consider that we’ve only had one serious financial emergency in almost eight years, it doesn’t make sense to have a chunk of money sitting in low interest-bearing account. It doesn’t make financial sense, that is. If it makes you sleep better at night, then it makes sense.

And I sleep better with one. Maybe I would invest our emergency fund if we had lots of assets or savings. But we’re not ready yet. However, you might be.

When an emergency strikes — and you don’t need an emergency fund

Once you determine that you feel secure enough without an emergency fund, what happens when an unusual emergency really hits? We were glad we had an emergency fund when our septic system failed. Trust me, nothing screams emergency like a backed up sewer system (into our house!) and a $14K price tag. Incidentally, because we had about three months before our bill was due, we worked hard to save during that time so our emergency fund wasn’t completely empty. It really…stinks to replace your septic system.

If the same emergency would have happened to someone who didn’t need an emergency fund, they would probably cash out some investments, tap the equity in their home, or use their line of credit. If they’re living way below their means, they can tighten their belt for a month or two and have enough money saved. Maybe even, as a last resort, they would break out their responsibly used credit cards.

The whole point is that you shouldn’t blindly follow personal finance advice. At one place in your financial life, you probably needed an emergency fund; but after you get established, you may be able to use that money elsewhere — and get better returns.

Would you ever go without an emergency fund?