Emergency funds and alternative forms of saving

The likelihood of meeting the three-month expenditure guideline for monetary, comprehensive, and subjective emergency funds is examined using data from the 1998 Survey of Consumer Finances. Specific independent variables of interest include the household's attitude towards credit, whether the household overspent, the expectation or future income, the working status of the spouse, and alternatives to emergency funds. Results suggest the actual emergency fund level held by households is more closely related to the ability to save than to the need for emergency funds. A home equity line or credit may be a feasible alternative to emergency funds.