How much do you need as an emergency fund if you lose your job?

Question

Now, let's say you have that amount already saved, plus you have additional funds. Should you just spend that extra money? In other words, when does a person have too much money, and what's the point of having extra money laying around if you're already prepared for a rainy day?

Answer 1

First reason for an emergency fund is in case you lose your job. So, if you lost your job today, how long do you honestly think it will take to find another comperably paying job? 3 months? 6? 1? Figure that out and set it aside.

Now, take another 1-2 months and set aside for an emergency. Car breaks down. Furnace goes on the house. You know, big unplanned stuff. Set that aside.

Now, keep a few hundred or whatever you're comfortable with for a rainy day. You know, that new thing came out and you just got to have it money.

The next question is are you saving for retirement? Use retirement calculators to determine how much you need to put aside per month. That will depend on your age, if your company matches contributions, and how much you already have. Start saving that or at least working towards saving that. It may take years to get that fund fully funded.

Okay, whew, still got some money? Set up some medium to long term spending plans. Like, you want a real nice vacation in 3 years and need $2k for that. Or you want that great car 2 years from now and want $5k for a down payment. Whatever. Start saving that.

Really, you still have money? Damn. Don't forget life insurance. Everyone needs that.

Finally. Blow the rest. Spend it. Have fun. Or...

If you plan on being rich you take that money and invest it in the market.

Good luck!

Answer 2

I thought the rule of thumb was 6 months - probably more practical these days than 3 months, since getting a job that doesn't involve selling fries and Big Macs is taking longer. And rainy days can sometimes come in clusters.

If you've got that amount saved, put the max you can into a 401K or IRA, then into some other kind of investment - secure your future.

OK, if you haven't been on a vacation for awhile, go ahead and have a good one.....

Answer 3

The generally accepted rule of thumb is 6 months expenses which includes rent , mortgage, insurance , food , clothes , gasoline , and all bills in general . I myself advise clients they should have at least one years savings to live on as the job market sucks now and is not looking good except for a few fields well into the first quarter of next year .

Answer 4

Typically, 3-6 months salary.

If you have "extra" money, keep it in your savings. When that rainy day comes, you'll realize that you spend it much quicker than you save it.

Answer 5

I depends on the type of job you are looking for. Many people here have suggested 3-6 months. I suggest you have 1 month's expenses set aside for each $10,000 of annual salary you are looking for.

For example, if you are looking for (and are qualified for) a job paying $80,000 per year, you need to have 8 months' living expenses set aside.

Answer 6

3-6 months' gross pay, generally.

If you have extra money, put it into your Roth IRA, and save for your rainy retirement.

Answer 7

3 months expense reserve

Answer 8

Too much money?? LOL

They say keep a three month reserve.

Answer 9

$3000.