Build an Emergency Fund Saving

How Much of an Emergency Fund Do You Need?

Am I the only person I need to support?

When you’re single, it’s easier to keep your overhead costs fairly low since you can directly control all of your expenses. If you’re married or have kids, the cost of maintaining a household is exponentially higher. As a result, your emergency fund typically needs to be a bit bigger to accommodate the added expense of taking care of multiple people.

Increasing your emergency savings to cover six months’ of expenses is a wise move, especially if you’re the sole breadwinner. If both you and your spouse work, having that added savings can help your income stretch even further if one of you ends up out of a job temporarily. Single parents would also want to use six months’ worth of savings as the minimum for building their emergency fund since there’s no second income to fall back on.

How quickly could I find a new job if I had to?

According to the Bureau of Labor, the average unemployment period lasts for nearly 31 weeks. That means for someone who’s been laid off or let go for any reason, they’re looking at close to an eight month stretch before they find a new position.

Building your emergency fund to the point where it covers eight months’ worth of expenses is a lofty goal but whether you need to go that route depends not only on your expenses and family situation but your professional background as well. If you work in a field where jobs are plentiful and you’re well-qualified to work in a number of positions, the odds of finding a new gig sooner rather than later are likely to be good. When that’s the case, an eight month emergency fund might be overkill.

On the other hand, if you’re self-employed or openings are scarce in your particular industry, finding something comparable to your old job may be more difficult. In that scenario, eight months of expenses would be necessary to hedge your bets in case you can’t find something right away. You might even consider bumping it up to 12 months just to be on the safe side.

Do I have any back-up sources of income?

When you’re gauging the ideal size for your emergency fund, you need to factor in what other sources of income would be available if you wound up out of a job or unable to work. For example, if you’re eligible for unemployment that could bring in a few hundred dollars a week to help fill the gap.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website,

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