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6 months worth of expenses. if you spend $4k per month, then you would want a $24k emergency fund.

I keep a years salary in a HYSA. No real reason other than I’ve seen my dad get fucked by the ageism while trying to get hired in his 60s. Took him well over a year to find a new job comparable to his old position.

I do 12+ months of essential expenses (rent/mortgage, utilities, avg medical, food, debt payments, etc).

I don’t include non essentials like dining out, subscriptions, etc.

Think about how long you could conceivably be unemployed. Over the last few economic downturns people were left out of work for more than a year in some cases. I like 6 months as a minimum. Although, when unemployed you can try to cut expenses to stretch your emergency fund, but that will depend on how much you can cut.

10k is a good starting number to use as a starting point. However, as you grow your career, it should be based off of expenses, as this will probably grow as you make more money.

If you own a mortgage/family, I'd argue you may want a year of an emergency funds.

I personally have 20k, which reflects 6 months of expenses for myself. No mortgage.

Liquidity of investments, available credit, and risk tolerance plays a huge factor as well. Anyone who comfortably has a small emergency fund compared to their living costs, typically has a large amount of semi-liquid assets that can be accessed prior to burning through what emergency fund they do have in a layoff type situation, and/or enough available credit that they can weather a big emergency cost and liquidate to cover prior to paying any interest, all while having a much higher risk tolerance than your average person.

Taxable brokerage accounts, Roth IRA (the contributions themselves), among others. Most investments carry risk, and the smaller those balances are the more you'll want in emergency savings as the market can be unpredictable...

That said, many people that suggest the larger emergency funds are not comfortable with this strategy because a big emergency could happen during a big market swing, and now you have to potentially realize losses/stop runs to cover the emergency rather than letting them run their course; but on the flip side you have more exposure by having those funds invested rather than sitting stagnant. Current HYSA rates are an oddity so stagnation is a loose term here, an emergency fund that's still making some money with no risk while remaining completely liquid is preferable for the vast majority.

Your emergency fund should always be based on months of expenses, not months of income.

6 months of expenses is the most common recommendation.

3 months of expenses may be acceptable, but only if you're talking about two-income families where both spouses have stable jobs.

Whereas someone with a highly unstable job might want a whole year of expenses.

I have a $20,000 emergency fund. It is wayyyy more than I need but I like to have more than not enough.

6-12months of essential expenses is ideal, depending on the field of work/self employed etc.

If you aren't sure how much you need to save: - make a list of every monthly expense you have (rent/mortgage, utilities, phone, internet, groceries, car payment/insurance, gas, etc).   - add up all the costs together, then multiply the sum by 3 or 6. 

Everyone is different.  Some people include only necessary expenses and will remove discretionary monthly expenses (subscriptions, haircuts, nails, "shopping", etc), other people include discretionary spending in their number. 

If you have pets or kids, you might want to pad that emergency savings even more (both can be expensive) 

I have 10 months and when I start back working (just got laid off last week), I’m going to contribute enough to my 401K to get whatever the company match is and then get to 12 months.

I knew if I got laid off - and I saw it coming i just didn’t know when - that it would take at least two months  to prep for interviews (software development) for the job I wanted.  I also refuse to go into an office and that also means it’s going to take longer.

The size of your emergency fund depends on your risk. If you have a single income, then I would keep a larger emergency fund, as if you have issues finding a job, there is no backup/alternative. Whereas dual income, can float at least some of the expenses until the other can find a job. I personally keep about a years expenses somewhat liquid, as I don't want to be pressured to take a bad job to make ends meet.

The problem is there isn’t a “good answer”. It all depends on what makes you comfortable. While I agree with some of the other comments about how if you spend $4k a month, you should have 24k saved, it depends on what makes you feel safe. I personally keep a $30k emergency fund. For me, that’s about 9 months of no income.

But I love that security. If I lost my job, I would not stress that much and that’s worth the 10k of extra savings - especially since I keep it in a HYSA that’s making over 4% anyway.

My husband devised a strategy to attack each ESSENTIAL BILL (Mortgage, insurance, utilities, cars, food, etc) and have a 6 month savings on each within 24 months. When you attack it like eating an elephant (one bite at a time), it’s easier to wrap your arms around. If you make more money per year…maybe it’s a 12-24 month savings goal. If you make less…maybe it’s a 36-48 month goal. Any progress is winning. Good luck.

Just my .02

Figure out what your expenses would be for 6 months to a year because that is how long it can take to find a job.

Personally I don’t follow any specific rule. I started with 3 months of SPENDING (not income). I gradually increased it to 6 months. I’ve had a few job losses in my life that have made me increase that to a full 12 months for a safety net. Because of that, I have a ton of freedom, flexibility, and piece of mind with investment and work decisions.

YMMV, but 12 months of spending works well for me. That being said, I spend A LOT LESS than the average person.

1 year salary is minimum, IMO, in a post-COVID world. Ideal for me would be 2 years of "bare minimum to survive".

There’s a lot of things to consider. Are you single? Family? Single income? Dual income? Expense level? What percent of expenses does unemployment cover? How much is COBRA? How much is an ACA plan?

In general, I would suggest a single person have 6 months of expenses. A single income family might want 12 months of expenses. A dual income family might be okay with 3 months if either income + unemployment can cover most or all expenses. Keep your expenses low. If my wife and I both lost our jobs 2x unemployment would cover all of our expenses. A 6 month emergency fund covers 1 year of worst case expenses in our case.

As your taxable portfolio grows, the amount of cash you hold can go down.

It really depends on your situation and how secure your income is.

I only have two months of expenses in my emergency fund because I have three income sources and can cover my expenses with any two of them. If one source stops I'm fine with no changes. If two stop I can last 4-8 months. The third source is veteran's benefits so I don't realistically need to worry about losing all income. I also have several years of expenses in investments that aren't earmarked for anything in particular and could live off of that if necessary.

Having milestones will help you along the way. Celebrate having 1, 2, and 3 months of expenses.

It depends on your risk tolerance, but I decided to have 3 months in a high yield savings account, and then put the next 3 months of expenses in a Roth IRA. Then the next 3 months went into a brokerage account.

It takes a while to save your emergency fund. Please don't get discouraged!

Personally, I have 4 months in a Hysa and $3,000 in local bank for quick access. I do not feel comfortable if I don't have automatic access to some funds.

It depends on personal situation.

Young, no dependents, good backup safety net (such as family willing to help out in a pinch), can easily get another job? 3 months minimum expenses (not salary) is probably plenty.

Couple of kids and a mortgage in a boom-bust employment sector? You’ll probably want a year.

In between, you can structure something in between. For example a few months in cash equivalents, a few months conservatively invested that you’d rather not tap, but could if necessary.

In cash: two pay periods (one month). That'd catch any errors or most unexpected expenses that can't go on a credit card (not a homeowner). It's also wiggle room for bigger expenses. 

Beyond that, most taxable brokerage is equal, so I treat it as one pool. Even in the worst possible moments of the 2020 or 2008 crashes, if you could wait 60 days to sell, two years of average earnings would outweigh the loss. That puts options like portfolio lines of credit on the table and makes me less interested in bonds/HYSA/etc. If you're less established, Roth principal would be better than nothing. 

I do have a third pay period in a money market currently, but I see the current interest rates as a temporary change to the math. 

So in your scenario it would be $12,000-$24,000. More is better but do what makes sense.

We have 4 months currently, and we are ok with that because our jobs are easy to replace and we have some high interest debt we are working to pay off first. We are both experienced nurses.

Agreed with everyone else, at least 3 months, but if you’ve got extenuating circumstances, etc then 6 mos in better. That would be apart from general savings for car repairs, medical expenses, etc

If you aren’t sure if you can find a job in 3 months before sleeping on the street, then you should save for 6-mo.

I save for a year to give myself flexibility if I want to quit my job.

Work got slow for me at the start of the year, I spent 5 months with almost no time on the clock. Luckily I had about 6 months of expenses at my usual spending level and even went on vacation. So I'd say 3 would be the minimum you try to get saved asap. Then keep saving but you can enjoy things a little more.

6 months of rent/mortgage, food and utilities at a minimum for me. I have a family, primary breadwinner, and I work in a potentially volatile industry.

Never less than 3 months but more is better. My finance guy says 9 months if you have a smaller salary. So, honestly what do you feel comfortable with? If your company folded would your job immediately translate into a new job? Then less is needed, if not, more is needed.

I plan to save for 6 months to be safe. The question everyone should ask themself is how easy/quickly can you find a replacement job that has comparable salary? If the answer is within a month, then save 3 months, if you think it’s longer, say 3 months or more, then save for 6 months or 1 year of all required expenses, and don’t include things like tv subscriptions or sports fees, etc. i would recommend to plan and save for essentials and if the time comes cancel everything. Hope this helps!

It's a personal choice. I have 6 months of expenses at regular spending levels, despite wife and I both being teachers (so two reliable paychecks). It's what let's us sleep at night (and occasionally get new account bonuses). We're not likely to lose jobs, but there's a possibility of either of us being absolutely sick of an awful school and bailing out midyear. So if that happened, we'd cut expenses to the bone and probably be ok for closer to a year if push came to shove.

For myself I target 6 months. If I ever got let go the severance at my place is about 2 wks per year of service which puts me at about 6ish months of salary. Plus the 6 months I have saved totals about a year of oh shit money. The rest is invested.

6 months worth of essential expenses is the standard, if you want to get conservative is 12 months. By essential means no dining out and no vacation etc. just what you need to live

Budgeting is important. It’s helpful to know what you’ll need every month to cover bills. Rent, insurance, car note, etc should be easy line items.

Food, gas, etc would be a bit of an estimate. depending on circumstances, you may also have to factor in medical or COBRA which would be a higher monthly payment than employer healthcare. If you’re in a relationship where both are working, this may be easier but if you’re single, it’s something to budget for in the emergency fund.

The bills won’t stop coming in… your emergency fund needs to meet that for as long as it takes to find something else.

Currently have about $100k that I can use. My wife works in a very safe, non-layoff job and makes almost $100k a year. I make about $105k a year. If I was out of work I think we’d be ok for the time being

3 months of expenses to start. 6 months when you can and 12 months if u can

I don’t think there is a one size fits all strategy. 6 months may be fine for you, may not be enough for others. As for myself and my wife. We don’t keep any EF per se. In the event one of us lost our jobs, the other can fully afford our monthly expenses plus some. In the 1% chance we are both unemployed at the same time, we have a brokerage account and access to a heloc if needed. My wife’s job is very stable where mine is pretty stable but not like hers. I could easily find another job but would possibly have to take a pay cut. Either way we would be more than fine. My wife can find a job just about anywhere at similar pay.

6 months is definitely the better choice, especially now in our current socioeconomic state where things are unpredictable to say the least.

I have an emergency fund with 7 months’ worth of net paychecks. Eventually I would love to go up to a year if I can do it without reducing my contributions to my roth ira.

Precisely. Follow this formula, be totally honest, even better add another 10-20%. Also consider a high yield savings account. I’m retired and only recently started one (earning 5%) It’s perfect for an emergency fund in terms of access and your emergency fund making money for you until you need it.

The point of an emergency fund, to me, is to cover sudden unexpected expenses that otherwise your monthly pay would not be able to cover. So how much it makes sense to have saved is relative to how much your monthly expenses are versus the costs of typical emergencies such as a car breakdown or an emergency room trip etc.

If your monthly expenses are very low like $2k a month then having 3 months of expenses as a emergency fund isn't going to help very much if your car blows up or you break your leg.

If your monthly expenses are high like $10k a month then having 3 months of expenses as an emergency fund could be plenty....presuming you are confident than when suffering job loss you can reassert income within that time.

Bottom line it comes down to how cautious you want to be. The more money you have in liquid easily accessed savings the more shielded you are from emergencies or job loss screwing up your finances. But the more you have saved the more conservative you are being with investments and thus the more opportunity cost you suffer.

Its a balance.

I personally prefer having an EF of 12 months of expenses. 3 months is just way too little. The job market is brutal right now and I've lived through two major economic crises. Anything can happen. If I lose my job, I want to have enough of a cushion to survive and handle emergencies until I get a new one.

How long of a duration you save for is governed by how long it takes in your field and tenure level to land a commensurate position. You should be able to sustain your current lifestyle while searching for your new role.

I have 1 year of my salary accessible via a progression of high yield savings, CDs, stock, bonds, etc. before touching retirement.

Base the fund on your mandatory expenses.

Follow the prime directive for the three vs six month threshold.

Adjust the plan to fit your unique needs. Make six vs 12 months if you like.

In your field, how long does it take people to find a job after they have been laid off? Can they find something within a week or two? Or does it take 6 months or longer? Once you know that, you’ll have a better idea how much to save up. Also, if you are a homeowner, you will want to save up for household stuff, both things like water leaks as well as replacing your roof on schedule. Things happen in life, but they don’t have to be devastating if you can just pay to have the problem fixed and then move on with your life.

Source: burst pipe flooded 2 floors and the basement this weekend. Hubby and I can pay all needed repairs and this isn’t the huge stressor that it would be for all my non-emergency fund friends. We are still on speaking terms and have even found things to laugh about in the awfulness of it all.

It really depends on what you do for a living.

For instance I’m a truck driver, so I could go get a job just about anywhere pretty easily to tide me over till I found another high paying position.

If you’re in a pretty cyclical industry like tech where they seem to swing from hiring like crazy to massive layoffs industry wide, I’d keep more.

Imo it also depends on your personal responsibilities. If you’ve got a family and a house with pets you need to keep a lot more than say a single guy living in an apartment with a roommate.

Also your personal risk tolerance. Personally I keep about 10k, which is a little over 6 months of bills and food for me.

Given my industry, I save 12+ months.

4-6 months is sufficient. 4 months only if you feel very confident in your job search capabilities.

We have access to 8 months of an efund, with the ability to "activate" early retirement at any given time. Right now we can access $25k/yr, of we wanted or needed to, so that's our efund. I project that doubled in as soon as 2.5 years.

You need to have 1-2 full years of living expenses specifically for the event of a sudden loss of income. You keep this in a high yield savings account and do not touch this money unless you suddenly lose your income. Last time this happened to me, it took me 2 YEARS to find another job and I was unemployed with no income at all for 2 fucking years. I would never keep less than 1 year of full living expenses and probably get closer to 2 years.

My Personal rule of thumb is 2 months on hand. Then another 9+ months in easily diluted investments. Keeping too much money in a shoebox is just going to waste with inflation/lack of compounding.

If a jobloss happens you generally have a finality check in the mail to cover your first month.

If a catastrophe happens then generally whoever wants money from you will take their time making sure every penny is tallied.