After a brief stint in the automotive industry in Detroit, Ryan Takach moved to Chicago to work for a major financial institution. The antics of traders on the trading floor stoked his curiosity for the markets, and an ex-pat assignment in London provided additional exposure to the global financial system. These experiences encouraged his investing and provided the financial foundation to manage the money challenges of a 30-something. He currently lives in San Francisco enjoying life after grad school.

The importance of keeping an emergency fund is hardly debatable. Virtually every financial columnist would agree that starting an emergency fund is the first thing to do when building your financial plan. Beyond that, however, is where black and white turns to gray. When you look at your own changing circumstances and try to make your best decision for your finances, that’s when you find your choices becoming less clear and more difficult.

The gray areas around emergency funds

The size of the fund you should keep is definitely one of these gray areas, but I am comfortable with six months’ worth of living expenses. For me, that is enough to cover lost income but also more than enough to provide for a wide range of urgent cash requirements. In short, I keep an emergency fund to prevent a major disruption to my primary financial objectives, and six months of living expenses seems to work well.

Another topic that is difficult to navigate is when to use your emergency fund. Some things in life are unquestionably emergencies — like an unexpected trip to the dentist or a flat tire — but others are clearly just opportunities. Using your emergency fund to pursue an opportunity might end up being a good decision; but then again, it could just as well be a horrible decision. In either case, unless you have too much emergency fund, you will need to plan how you are going to replenish it — as I am doing now.

An opportunity had me weighing my choices

In my case, having a fully funded emergency account allowed me to relocate to San Francisco recently when a major career opportunity came my way. I could tell from the beginning the job was a strong fit with my experience and career objectives; but even though I am trying to build my career, I wasn’t going to accept any offer that came along (particularly when it would mean moving to a much more expensive city).

I kept thinking about what I would need in a job to make sure it was worth the expense of moving and that I would come out ahead in the long run. As much as I wanted to move to the city, it still had to provide a better-than-average return both in terms of salary and long-term growth to make it worth the move.

When the offer came in, I knew it would work and that I would have to move fast — but I didn’t anticipate a lot of the situations I was about to face.

I knew the rental market was going to be tough, for example. I’ve heard a lot of stories about one-bedroom apartments renting for more than $3,000 in San Francisco, but these stories didn’t make it clear exactly what other push-points I would encounter in the rental market. In fact, there are big up-front costs involved in moving to a city where the competition for housing is high.

What I learned is that, to accommodate for the high demand, many apartment showings are conducted as an open house so the leasing agents can avoid the nightmare of scheduling individual appointments. Because of this, it is necessary to have cash on hand to secure a place — there is very little time to waste moving money around or securing lines of credit. Cash is king and everyone is prepared to make a move. The open houses at new developments were certainly the most grotesque example of this, with applicants frantically filling out paperwork and providing various documents to establish their creditworthiness.

I did my best not to partake in this madness and instead found more reasonable accommodations in a nice, four-unit building with the owner on site. However, the reality of the immediate cash requirement was nevertheless the same, a fact that sank in with me around the time I had to write a check for the deposit plus first- and last-month’s rent. This was a rather large sum of money in the context of my spending habits and I didn’t actually anticipate having to pay the last month’s rent at all because that wasn’t a normal practice where I had rented in the past.

Originally, I planned to use my emergency funds as a buffer to cover moving expenses and make up for lost pay in the time off between jobs.

But as the whole thing developed, another complication cemented my choice to use my emergency funds — the requirement that the deposit be paid by certified check. I didn’t anticipate this either; I’ve always gotten by with personal checks in these situations.

For me, getting certified funds is complicated because the account from which I was writing checks is online, and transferring cash to my brick-and-mortar bank to get a cashier’s check would have taken too long. At least my good credit was enough to convince the agent to allow a personal check on my promise that it would clear.

Providing for a higher cost of living

Career opportunities aside, this move has been a massive hit to my savings plan. Even accounting for the refunded security deposit on my old apartment and the payout of five unused vacation days from my previous job, it will take a long time to get back to even. In addition to the almost $9,000 outlay to secure the apartment, I incurred an additional $2,000 in moving expenses. I plan to replenish that amount first, and then I can go further to adjust my target of six months’ living expenses to accommodate the higher cost of living.

I don’t think I’ll be able to fully calculate how long the recovery will take until I experience at least a few months of billing and payroll cycles. Until then, I feel I can only speculate based on what I estimated my living expenses will be. But my goal is to cover six months’ worth of living expenses again which, just for rent alone at close to $3,000 a month, means my emergency fund balance would need to be at least $18,000. Saving even $500 a month, it would take me three years to reach that amount. You can see why I feel a sense of urgency to get my plan in action as soon as possible. Still, my emergency fund gave me the risk tolerance I required to make a life-changing decision that I believe will support me well as I plan the next decade of my life, and I’m glad I went for it.

Renewing my commitment to good financial values

Using my emergency fund to advance my career doesn’t mean that I have abandoned the financial values that got me to this point. If anything, this experience reawakened me to the importance of having an emergency fund and I feel even more committed to the financial values that got me here. I still live below my means; but before the job offer, I was becoming less frugal because I had reached my original savings target. My savings tapered off toward the end and I was spending more on discretionary things like entertainment and travel, being a bit more carefree with my hard-earned money. Now I know that I need to go back to basics and exercise caution with my spending.

I have started to make some of the more obvious cutbacks like packing a lunch, eating at home more often, and curtailing lavish evening activities. Even though I would love to freshen up my wardrobe for the new job, I have put off shopping for new clothes. I’m holding off on all new travel plans, even with summer approaching. Instead, I have decided to seek out activities that don’t involve spending much money, which is fairly easy to do in a city like San Francisco. I even got a library card this week and checked out a book to read on the bus. (By the way, I was very impressed with the selection at my local branch. I think libraries are easily forgotten in the discussion of frugal living. I am looking forward to using this valuable public resource more often.)

All of those things will help; but in my mind, they are mostly low-hanging fruit. My biggest woe in this entire ordeal is that I will have to curtail my investing activities. I am very passionate about investing and have enjoyed putting my surplus capital to work for me ever since I fully funded my emergency account. Now I am faced with the choice between committing all my excess cash to savings and earning very little interest, or putting my cash at risk in the hope of a better return. For the sake of financial responsibility, and because the necessity of the emergency fund is so deeply ingrained in my financial foundation, I find it more prudent to focus on rebuilding my savings account. The sooner I can hit my goal, the sooner I can start investing again; so in many ways, this is an incentive to be frugal and save.

Have you recalculated your emergency fund balance to accommodate a higher cost of living? What did you do to replenish your account?

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.