Fearing the Unknown… Perhaps a Bit Too Much

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Right now, our emergency fund would cover ten months’ worth of living expenses for our entire family. This is, of course, assuming that Sarah and I are both jobless (though able to care for our children) and that I’m earning absolutely no income from The Simple Dollar. We would be able to pay our bills from our cash reserve for ten months in this situation.

First of all, how did I build that up? The truth of the matter is that Sarah and I are both pretty frugal. Our only outstanding debt at this point is our mortgage and we minimize our spending in other areas. Over the course of running The Simple Dollar, we’ve done a lot of little things to reduce our spending, from air sealing our home to putting in a programmable thermostat and mastering the use of our kitchen. Beyond that, we’ve both reached a point where our frivolous spending is pretty small. I would not be surprised if I spent less than $100 out of pocket on things that aren’t basic requirements in 2011. Truly, I don’t feel like I need anything, and my wants are pretty minor as well. When you don’t spend, you accumulate.

(It’s also a sign that “ten months’ worth of living expenses” isn’t nearly as much money as you might think it is. It covers our mortgage, our bills, and about $350 a month for food.)

Here’s the thing, though. A great deal of that accumulation is just sitting there in cash form. Rather than putting a significant portion of it into investments, I keep it for an overly large emergency fund.

Is that a good thing (better safe than sorry) or a bad thing (being too overcautious is keeping me from reaping rewards)? Well, let’s walk through that question step by step.

What’s an Emergency Fund?
Simply put, an emergency fund is some amount of cash you have in reserve to handle life emergencies. If you lose your job, your emergency fund is there to help with the bills. If your car’s transmission starts dragging on the ground, your emergency fund helps with the repair bill. If your sister shows up on your doorstep in tears and you find yourself with an unexpected house guest to feed and clothe for a month, your emergency fund is there for you.

You get the idea.

An emergency fund should be relatively easy to access. For some people, just having it in their local bank’s checking or savings account works. For others, it needs to be in a more remote location, or else temptation will convince them to spend it all on bubble gum.

An emergency fund should not be a credit card or a line of credit. Both of these things rely on a bank that’s always going to be willing to extend credit to you. The very time you need an emergency fund is often the very time you become a less reliable place to extend credit to. Credit cards and lines of credit are not rock-solid and reliable.

In short, an emergency fund needs to be reliable and accessible to truly be useful.

How Big Should It Be?
This is really the big question, isn’t it?

Dave Ramsey, for example, suggests that a person shouldn’t have an emergency fund at all until they’re caught up on their bills and shouldn’t have more than $1,000 in their emergency fund if they have any outstanding high-interest debt (probably anything above 8% or so).

The more personal finance books you read, the more answers you get. $2,500 will be the advice from one book. One month of living expenses, says another book.

The advice I’ve come to trust and rely on is two months’ worth of living expenses for each dependent in your household. I think this is a great number to shoot for in a small household – a single person, a couple, or a couple with child.

But when you start having multiple children – as we do – does it cross some sort of line?

The Fine Line Between Practicality and Paranoia
What sort of future am I envisioning in which ten months’ of living expenses will be needed? Can I even envision emergencies that will require such a chunk of cash?

I certainly can. I can imagine a long period of unemployment. I can imagine various disabilities and long-term illnesses.

In each of these scenarios, however, I still can’t realistically conceive of how ten months’ worth of emergency fund will be needed.

The only possible scenarios where such a large emergency fund would be needed are ones that involve a long series of simultaneous incidents. Frankly, these types of scenarios border on paranoia when I step back and look at them realistically.

Thus, I’ve decided to pare down my emergency fund to six months’ worth of living expenses and put the rest into our investment account, which is being used to save for a piece of land in the country (although, of course, it might be used in other emergencies if absolutely needed).

Being practical and having an emergency fund is a good thing. Being paranoid and having an excessive cash emergency fund merely means that you’re leaving other opportunities on the table.

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48 thoughts on “Fearing the Unknown… Perhaps a Bit Too Much

  1. My first thought when ‘what could happen besides job loss where I’d need so much for an emergency’ is a medical emergency. Even with insurance there are many things that have to be covered out of pocket. And recovery can take anything from 6 weeks to the rest of your life.

  2. After a 5 mos unemployment (I’m a lawyer), I’d suggest something closer to what you have saved up.

  3. I’m totally on board with Amanda’s comment. That emergency fund should definitely include enough money to pay for monthly health insurance premiums in full, plus an amount equal to your annual maximum out of pocket expense for medical care as outlined in the policy.

  4. I think the question would be how much does Trent need in cash that can be used RIGHT NOW. He isn’t talking about taking 4 months worth and putting it away in a 20 year CD that can’t be touched. He is just moving it out of the strictly cash account where it is now into a slightly less accessible (but still accessible) account that will earn a bit more interest.

    I think it is a good move.

  5. I agree that having an emergent fund then a more managed (6 mos CD maybe) fund for use after that makes more sense.

  6. Two months’ expenses for a single person is nowhere near enough. Maybe it would be enough if the economy were good, and the single person were working in a field that’s in high demand. But in this economy, for most people? No way.

    Last time I changed jobs, I had my new (current) job lined up long before I left my old one, and I still burned through at least two months’ expenses in the interim. That’s because changing jobs required moving to a different city (and in fact, a different country), so I had moving expenses to pay, and I went several weeks without working in order to get my affairs in order in my old home and get settled in in my new one. If I had to change jobs again, it’s likely that I’d have to move again. If I found myself with no job, nothing lined up, and only two months’ expenses in savings, it would make me very uncomfortable.

    Don’t forget that in a two-adult household, if one person loses his or her job, the other one can keep working. Or, at the very least, they can both go out and look for work, which doubles their chances of at least one of them finding a job. Single people don’t have anyone else they can rely on. So I would advise my fellow single people to aim for more months’ expenses than a couple would have, not fewer.

  7. When I was married, I worried less about how many months emergency fund I had. It was unlikely both of us would lose our jobs at the same time. But now that I’m single, I feel I need a larger fund – there is no second income to fall back on. 6 months of household expenses (including medical – excellent point #3) would be the minimum, 12 months would make me more comfortable. This from someone who is not particularly conservative about finance and investing.

  8. Yeah, I kind of think Dave Ramsay is too conservative on this – given how long many people who become unemployed are out of work in this recession, having a large emergency fund is becoming more and more important.

  9. I agree that the size of a person’s emergency fund depends on many personal factors. I also agree that a large enough emergency fund to cover many, many months of expenses is a Good Thing. Finding the balance can be tricky.

    But remember that it doesn’t all have to be in the standard “emergency fund” account. Maybe the first few months could go in a highly-liquid and stable (and therefore, low-interest, unfortunately) account such as a Money Market fund. That’s the portion you’ll need for the immediate emergency needs.

    But the portion beyond that can go into CDs, short and intermediate-term bond funds, etc. You probably won’t need to get at that money until you’re fairly far along into the emergency. And it could be argued that a longer-term emergency is less likely than a short-term one in the first place. So you can afford less liquidity and a slight bit more risk in exchange for a higher return.

    You could even split it into three groups, if the size of the fund merits the trouble. For a ten-month EF, for example, you could do 3 months in money market, 4 months in short CDs and/or short-term bonds, and the final 3 months in longer CDs and intermediate bonds.

    JJ

  10. I think a naming issue comes up to. Dave Ramsey’s EF is for the little things that come up (car repairs, larger than expected dental bill). Trent’s EF is for a catastrophic event (job loss). Even though both funds need to be readily accessed, the purposes are different and thus need different amounts to start. Once debt is paid off, then Ramsey’s EF becomes more like Trent’s. But the $1,000 EF is to help prevent followers from getting into more debt.

  11. I’ve got 2 years and 8 months of “emergency fund”. Or I’ve got 2 months of EMERGENCY FUND plus another 2 years and 6 months of money in taxable investments.

    Is there a substantial difference? Yes, the taxable investments might only cover 1 year and 3 months of expenses if the market crashes and I don’t get out before needing the money.

    Is a bad outcome? With the kinds of sums we’re talking about, probably not.

  12. George, I think that raises an interesting point, which is that to a certain point, this is all semantics. We might all be saving for new houses or cars or whatever in investment funds but when it comes to it, we’d also probably all apply those investments to an emergency fund when it comes to it. You don’t necessarily need that much money in a liquid “emergency fund” if you have other reserves you can break into when it comes to it. In fact, I remember reading once over on Get Rich Slowly that a survey of financially secure people (“millionaire next door” types) found that most of them didn’t have something labeled as an emergency fund; they just had financial cushions and reserves they could break into if need be. Certainly my parents fall into this category; they’ve never felt the need to have a specific account labeled as “emergency fund.” They just have cash savings that are sufficient to be used for various purposes while ALSO having enough left to serve for “emergencies” and investments that can be tapped if need be. It works fine for them.

  13. @Katie: What you describe is to a large extent what’s going on with me. I have a lot of money in low-risk investments right now, because that money is part “emergency fund” and part “downpayment on a house or condo maybe someday fund.” If a financial emergency were to come along right now, I could handle it, no problem. But if and when I ever do get serious about buying a house or condo, I’m going to have to make a decision about how much of my reserves I need to keep and how much I’m willing to give up. (I’m not saving for any other large purchases, so it’s not like my reserves would be further broken down into “emergency fund” and “new car fund” or anything.)

    So even though you don’t have to have a sharp line drawn at all times between “emergency fund” and “cash savings for various purposes,” if you ever do want to use those cash savings for those various purposes, you are going to have to draw that line, it seems to me.

  14. “I would not be surprised if I spent less than $100 out of pocket on things that aren’t basic requirements in 2011. Truly, I don’t feel like I need anything, and my wants are pretty minor as well. When you don’t spend, you accumulate.”

    I’m confused by this line, Trent. Does that mean you spent less than $100 on non-essentials in the first 4 days of this year? Or was the 2011 a type, and you meant that you spent only $100 on non-essentials in 2010? If so, how does that jive with the spending patterns on books and games that you’ve spoken about before? This is very inconsistent with your discussion about “wants” and “materialism” in previous posts. Please clarify.

  15. Remember that there is also unemployment benefits you would get if you’re unemployed and that should factor into these discussion about emergency funds, even if it takes a while to get unemployment benefits set up…

  16. I’ve got to admit, I was surprised at Trent’s conclusion. I fully expected him to conclude that 10 months was appropriate. I was encouraged to see him realize that 10 months is excessive for his situation.

    Of course, every situation is different, but Trent’s situation definitely does not require 10 months of living expenses. Yes, job losses happen, but you have to consider specifics, too. Such as the fact that Trent’s wife, Sarah, is a school teacher, and is thus extremely unlikely to ever lose her job.

    Likewise, Trent’s “job” as a blog author is not just going to suddenly disappear overnight. Trent controls how much or how little he earns from this blog.

    Finally, it’s extremely unlikely that both Sarah’s and Trent’s incomes would both vanish SIMULTANEOUSLY. That would take a confluence of circumstances that would make a 3-time lightning strikee step back and say, “Whoa. That’s some awful bad luck.”

  17. @#8 and @#12, Katie: You are right. Longer-term dependence on government unemployment insurance suggests to me that a family’s self-funded unemployment safety net should cover a year or more of living expenses. So Trent’s 10-month hoard is not too conservative. I try to hold about a year’s expenses in cash.

  18. Kevin, actually I’m not so sure – layoffs have been pretty common in school districts near me recently (though Sarah’s may be more secure or she may have enough seniority that it’s not an issue). And if she did lose her job, they’d have to pay for health insurance out of pocket which can be extremely expensive. So they might be in a different situation than couples where both have health insurance through their job.

  19. I think the appropriate answer to “How much?” should be “The amount you need to feel secure and comfortable”

    For my wife and I, we’ve set that number at 1 year of my wife’s post-tax salary. That gives us one full year of costs at our current level of living, and easily 1.5-2 years if we went ultra-frugal and were both unemployed.

    That money will just sit in an ING account earning a bit of interest every month. The purpose of that money is to place us in a situation where we are never trapped in a situation. We aren’t beholden to a job and feel secure enough to make a leap if a new opportunity comes along.

    That money is there as a “The world is falling apart around our ears” fund. Chances are, we’ll never need that full amount and by most people’s measure, it’s excessive. And I’m sure a lot of folks will say that I’m missing out on big opportunities leaving that much money sitting alone, doing nothing for me. But you know what starts happening with every dollar past that amount? I can invest, I can save for a house, I can put it towards any of a dozen plus different goals my wife and I have and not worry about whether or not I should be saving any more for a “rainy day”. I sacrifice some short-term opportunities for a lot of new ones in the medium-to-long term.

  20. @Kevin: Another thing to consider is that if Sarah *were* to lose her job (which, I agree with Katie, is not as unlikely as you think, in these days of tea-party types railing against any and all public-sector employees), she’s not likely to get another teaching job one or two or six months later. More likely, she’d have to wait a full year, or more than one year. Or take a job outside of teaching, which would likely involve a pay cut.

  21. I think the 10 months is about right also. Unemployment can be very long term these days, even for the highly qualified.

    Putting it into the house fund is fine, if you can easily access it. But the minute you spend it, your actual security will drop by 40%.

    I do hope if you buy land and build a house, you have a well, and a composting toilet, and solar/ geo-thermal heat, and your long term reliance on utilities sure to become very expensive will be minimal!

  22. As a Christian I really struggle with this area. I know I need to be a good steward and save for an emergency so that I am not a burden on others, but on the other hand I know I am not to be a hoarder with my money either. Right now we have a mortgage and car loan and can just meet our expenses saving only for a retirement and not adding to our e fund which is currently at about 4 months of expenses. I tithe 10% of pre-tax income pretty much every single month. Sometimes I want to cut back on the tithes at least until the car is paid off, but I feel like it isn’t God’s fault we bought an expensive car that we didn’t trully need.

  23. I wouldn’t reduce the EF either. In fact, I probably would go for 12 months.

    And yeah, single people should aim for big EFs, not just two months worth of expenses!

    I was once in a situation where my income stopped coming in all of a sudden (although I was working the whole time– it’s a long story). It was nearly six months before my income picked up again, so I was happy to have an EF I could use in the meanwhile. But the whole experience made me realise that 6 months weren’t nearly enough — let alone 2 months!

    I understand not wanting to give in to fear and paranoia, but look around — the situation *is* dire. I like sleeping a bit better at night.

  24. I wouldn’t consider it paranoid to think you might be out of work for 10 months. I know 1 person who has hit their 99th week of unemployment and another who is getting close to it. Both have been doing everything they can to find a job but haven’t had any luck.

  25. I would love to have a year’s worth of money in an emergency fund, but I think 6 months will be good enough to keep us afloat. That’s our goal this year: to build up an emergency fund.

  26. Those are just 2 that I know that hit the mark or are close to it, I know other people who have been unemployed and are having a hard time finding a job. A real problem is that any jobs in their field are getting hundres of resumes and they can’t even get a lower paying job because there aren’t that many openings or it’s the same thign – hundreds of people applying and over qualified candidate4s aren’t being looked at.

  27. My husband and I had to go back and forth on this issue before we finally agreed that our emergency fund would be: 6 months of net income + 6 additional months of our current transportation budget (assuming that we’d need extra gas, oil changes, etc. for the job seeker) + 6 months of what we estimate COBRA would cost for our family. That actually works out to just short of 8 months of our current net income.

  28. I think your ‘two months per person’ is a really silly standard. a single person isn’t likely to be out of work any shorter a time than a person with a spouse and/or children. If it’s a matter of dealing with no income, then you should have enough money for x months to cover the expenses of all dependents. so yes, six months to cover one person is much less than six months to cover five people. But it does not logically follow that if one person needs to be prepared for two months, that five people need to be prepared for ten months (or the opposite).
    That’s just silly.

  29. When it comes to job searches, the old rule of thumb used to be that it’d take one month per $10K of annual income to find a similar job. e.g., $70K annual salary = 7 month long search.

    In the current economy, I’d at the very least add 30-40% to this general rule.

    If you’re single and making $100K, a two month emergency fund is an utter joke.

  30. @Kai – #30 – I think the disconnect here maybe regarding the purpose of the emergency fund. If the emergency fund is intended to cover expenses during a period of unemployment, then you are right about Trent’s logic being faulty. If, however, the emergency fund is intended to cover unexpected expenses (medical emergencies, unexpected auto or home repairs, need to travel across the country to help a sick relative, etc) then basing the amount on the # of dependents makes sense. The more people in the family, the more likely (and potentially more expensive) an emergency may occur.

    I think that everyone needs to determine what the purpose of his/her emergency fund is, and fund it accordingly. Even though Trent uses unemployment as an example, my guess is that his emergency fund is geared more towards unexpected expenses rather than lost income since it is unlikely that his family would lose all income suddenly.

    My emergency fund, however, is based on providing income in case of lost income (we are a single-income household). If we have unexpected expenses we cover those out of the emergency fund, then refund it in the following months.

  31. kjc #31 brings up a point that makes me think of another variable. Should the size of the emergency fund depend on the amount of monthly expenses? Perhaps someone with monthly expenses of $1000 can do fine with an emergency fund of 2 months expenses ($2,000), while someone with monthly expenses of $5,000 might need more than the 2 months ($10,000). This is based on the idea that it is easier for the person with $1000/month expenses to find a job in the case of lost income than it would be for the person with $5,000/month expenses.

    On the other hand, what about unexpected medical bills, or auto/housing repairs? Income or normal monthly expenses do not directly impact the cost of such emergencies, which means that the person with $10,000 in their emergency fund can much more easily deal with a $5,000 emergency than the person with $2,000, even though both have 2 months expenses saved up.

  32. We can cover our bills on the lesser of our two salaries. Otherwise, we’re more along the lines of #11 George – in the unlikely event that we both lose our reasonably secure jobs in completely different fields, we have three months expenses available labeled as “emergency” and another eight months we could access without any penalties if we had to. In response to Jonathan’s question, we also have money set aside for our insurance deductibles (separate from the EF), should we find ourselves in that situation. None of the above takes unemployment benefits into account, and we both have health, disability, and life insurance. It’s a holistic sort of emergency preparedness rather than “EF = x months.”

  33. This is really more of an issue for people who don’t have adequate cash reserves. Trent is talking about taking 4 of his 10 months’ worth of reserves and putting them in an investment (which type, he doesn’t say–kind of an important omission but I’ll assume perhaps a stock index fund).

    If something dire happenened in his life, he and his wife would have a full 6 months to both attempt to fix the problem and to get cash in his investments.

    This is very different from someone who is talking about, not a cash allocation decision between liquied savings and less liquid investments, but who simply doesn’t have money lying around to help them.

    I don’t feel that it’s excessive in any sense to have 10 months worth of liquid or relatively liquid assets tht you can put your hands on in need. AS a matter of fact, if you don’t have AT LEAST that then you are vulnerable. But once you have that much and more, it’s reasonable to decide to put some of it in a less liquid investment while leaving 6 months in a bank account.

    Also, look at this from another perspective: By the time we retire, we need to have not 10 months worth of money but 20 years worth of money put away. That kind of puts things into perspective as well. In addition to the income replacement emergency fund you’ll probably also have retirement funds, medical copay funds that you have saved up, car repair funds, and the list goes on. One would hope that ALL of this adds up to much, much more than a mere 6 or 10 months worth of funds.

  34. A few months ago, I sat down and actually calculated what we would actually NEED on a monthly basis (rather than the way our zero-based spending plan looks). No more cable, no more preschool or kids’ activities, no more IRA contributions, reduced grocery and entertainment expenses, etc. I was surprised at how low I actually could go if I needed to.

    Then, I figured out what resources might be available to me under emergency circumstances. Turns out my emergency fund might go further than I thought.

    I also agree that there should be a layered approach – we have similar non-cash investments that are not retirement savings. If the proverbial crap hit the fan for an extended period of time, we could access that money in the time our EF would buy us financially.

    Do the math – you won’t regret the mental and financial exercise.

    P.S. I also did the same math for my life insurance situation. Now no salesman can tell me I need to buy anything – I have an adequate life insurance plan for myself and my family according to my goals.

  35. I keep all my efund in ING (about 16 months), which works for me. I feel I need much extra since I am single and like Johanna, may have to move to find new employment in case of job loss. However, if due to illness or accident I’m unable to physically tranfer money out of ING, my bills still won’t get paid. I don’t have any friends or family nearby who could do this for me. What do other people do in this situation?

  36. I have several years worth of spending assets in “taxable investments” but only a small amount in cash (about $10k). I do figure I can borrow more money in an emergency to tide us over before having to sell investments in the event that the market is doing really badly. But it is a question of how much risk you are willing to take on this.

  37. I think putting an initial goal on an EF is a good idea for motivation and that there should be a line to not go below for security but where I get lost is haveing a cap on the EF. Once I have X amount saved I shouldn’t save anymore and just start spending it? I agree there comes a time when the money can get tiered into levels of ‘locked up’ vs ‘interest earned’ or marked for other things like retirement or college tuition but I don’t think there is a time when we should stop putting money away in “EF savings” if all of our other bills/debts are covered.

  38. While I don’t think 10 months is excessive, it does make sense to move it from cash into investments, given your situation. It isn’t as though you are going to go out a spend it on a vacation.

    Trent, I also really hate this advice “two months’ worth of living expenses for each dependent in your household.” It makes no sense at all. I think the whole family should be able to survive for 6 months (or more if you want), regardless of how many people. As others have mentioned, 2 months for a single person is absurd, unless they can move in with their parents.

  39. Personally, I use 2 kinds of emergency funds. Maybe Trent can try this too.

    The first emergency fund is a ‘real emergency’ fund. This means I can access the money *right now* when I need it. We have saved 1 month expenses for each person in our household (4) in this way. It’s on a ‘not-so-high’ interest savingsaccount.

    The other emergency fund is our ‘insurance fund’ which we use for bill were payment can be delayed. It’s invested in different short term vehicles that can be liquidised within a month. Yes, that might mean a hit on profit, but usually more than on a savingsaccount.

  40. You have to be out of work 6 months before you can file for even partial SS disability, so I’d peg this at the absolute minimum living expense in the event of medical emergency. A year between jobs is no longer uncommon, even for the credentialed.
    Of course, once you get on the land, your garden will extend your funds, but the projected $3.50/gallon gas for transportation to work will eat up the savings, plus even more.
    Our economy is entering a phase where paranoia becomes a way of life for many of us.

  41. I really am shocked that you would suggest a two month emergency fund. I am single and therefore have only one income. I have a six months emergency fund which, together with unemployment, would carry me nine months. Just look at the job figures regarding people who have been out six months or more – hundreds of thousands if not millions. I have been let go six times in a forty year career through no fault of my own (business closing, business sold etc) and I have been out for as much as a year. It is irresponsible to tell people to have less in the bank during this recession and it is much more important to save for the emergency fund than to wipe out debt as long as you pay minimum payments until you build your fund. I keep mine in a money market account where I can get at it and it earns a little bit. I don’t want to pay taxes or lose major interest by sacrifing investments.

  42. I went through the same exercise as Trent and came to a similar conclusion recently. We have 12 months of basic expenses (mortgage, utilities, food, but no fun money) in 12 1 year CDs that rollover each month. The yield is low, but this is exactly what I needed to feel secure over the past year or two when I felt jobs were very shakey.

    I have a new, secure job. Things are looking up. I’ve decided to pare back to 6 months and put the remainder in my early retirement fund. The early retirement fund is also accessible in case of catashrophe, it’s just in a riskier vehicle. To add to this, the 6 month emergency fund is actually going to be pretty close to the 12 month in total dollars, because we’re having a baby very soon and I want to include daycare and extra food expense in the bare bones expense list. I thought up scenarios where neither my husband nor I are working, and the only 2 I came up with were a) both laid off, and job hunting frantically (in which case we need daycare so we can go on interviews) or b)one is very sick/injured and needs constant care (in which case we need daycare so we can go to doctor visits and physical therapy). Maybe in reality we would find a friend who can take her on a moment’s notice, but I’m still thinking pretty conservatively.

  43. Timely post.
    I just took $3000 out of my emergency fund to max out my HSA. I’m debating if I should focus on rebuilding my emergency fund to where it was prior or not. On one hand, I still have the $3000 and could use it in a medical emergency. But on the other hand, it isn’t available if I become unemployed and need to pay the mortgage. And then there is the question of how much is “enough” in the HSA.

  44. Agreed, Trent, I think that amassing huge emergency funds at some point is just paranoia. You have to be able to rely on your own initiative and go-get-it-ness to some extent. And if it were a huge medical emergency, 10 months’ expenses wouldn’t cover it anyway.

    I see that you still haven’t gotten over your idea that singles don’t have any valid concerns, though. Two months? REALLY? As Johanna and others pointed out, couples need LESS of an emergency fund than singles, because they have two possible income streams.

  45. the EF size will also need to depend on personal factors such as do you own a car or will you have to return the company truck. Medical insurance? Are your appliances & house newer or older needing lots of necessary repairs (or renting and not liable for such repairs)? Second family income to fall back on or ease of getting another job. Also don’t count on unemployment benefits if you are fired instead of laid off. Granted its always best to prepare for the worst so it never comes.

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