How Much Do You Need In Your Emergency Fund?

How many months savings do you need ready for unexpected emergencies?

You've heard the advice before. To shield yourself from life's uncertainties, set aside three to six months' worth of savings as an emergency fund.  Yet, while this advice is valid, it isn't realistic for most individuals. Most Americans would find it difficult to come up with $400 to cover an unexpected emergency. The best move is to be flexible—especially if you’re not a salaried employee.

Here are some useful suggestions from Brass Taxes founder, accounting professional Jack Garofolo:

  • It is not a sign of irresponsibility if you can't keep the six-month rule.
  • Take into account other elements that may assist you stay afloat in tough circumstances. “It's uncouth and offensive to discuss socially, but if you needed more, could you get it?” Garofolo asked. “Could you get family help if you really needed it?”
  • Consider how you might diversify your revenue streams in the short term if your personal emergency fund isn't as big. If you are planning to quit your primary job, for example, Garofolo said, “Are you going from a W-2 job and just job hunting, or can you make a few hundred dollars here and there to make ends meet while you’re looking?”
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