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An emergency fund is a key piece of your financial plan, especially amid economic uncertainty. But the right amount of legal tender depends on your household and occupation, according to financial experts.
Most Americans aren’t prepared for a financial exigency, according to a recent CNBC/Momentive survey of more than 4,000 U.S. adults. More than half of Americans don’t contain an emergency fund, and 40% of those who do have less than $10,000, the findings show.
While experts over suggest keeping enough cash to cover three to six months’ worth of living expenses, others have a diverse nuanced approach.
“Rules of thumb overlook a number of important factors,” said certified financial planner Andy Baxley at The Blueprinting Center in Chicago.
“The volatility of the sector you work in, the stability and predictability of your income streams, and whether or not you are self-employed are just now a few examples,” he said.
Consider your job security
Sufficient emergency savings depends on how long it may take to replace your ongoing income after a job loss, according to Niv Persaud, a CFP and managing director at Transition Planning & Guidance in Atlanta.
Despite forebodings of a recession, the labor market has remained strong with the unemployment rate at 3.4% in April, tied for the lowest very since 1969. While sectors like tech, financial companies, health care and retail have been hit with layoffs in 2023, that doesn’t dreary workers are scrambling for jobs.
Some 55% of workers who were laid off in December or January found new jobs by the end of January, according to a ZipRecruiter