Do You Need a 12-Month Emergency Fund? Here’s Why You Might — and How to Get It

What seemed like a reasonable goal for an emergency fund — three to six months’ worth of expenses — no longer feels that way after Covid wreaked havoc on our economy.

Financial expert Suze Orman thinks people with stable jobs should be aiming toward a 12-month emergency fund after seeing millions of people blow through their savings last year. If you thought it sounded ridiculous to save that much money before, maybe this perspective changed your mind.

TPH Senior Writer Nicole Dow dug into the pros and cons of a year-long emergency fund, including who needs it and who doesn’t.

She also details how to determine what your emergency fund should look like. Hint: It’s not 12 months of your take-home salary, but a bare-bones budget that is survivable for you and your family through four seasons.

Here’s how you can figure out how much to put in your emergency fund — and how to come up with the extra cash.

1. Determine Your Bare-Bones Budget

If you lose your job, how long will it take you to get another one? It depends on your industry, but the average is around five months (and this was before the pandemic hit). You hope it will be less, but it could even be more, so you need to be prepared.

That means detailing out a bare-bones budget that you can adjust if the need ever arises. Keep only the essentials and cut what you can live without. Food, shelter, medical expenses, utilities and minimum debt payments can stay; subscription services, extra debt payments and extracurricular activities get paused.

You can also see if your utility companies and banks can offer assistance or reduce fees and check with your mortgage company about forbearance options.

Once you’ve created this essentials-only budget, multiply it by 12. That’s what your 12-month emergency-fund savings goal should be.

2. Cut Your Bills Now to Help Save For Later

There are some bills you can cut down now, without having to sacrifice anything.

By slimming down these monthly payments, you can save more money immediately and have less to worry about if you ever need to dip into your emergency fund. A win-win.

Start with your car insurance. When’s the last time you even checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

Use a website called EverQuote to see all your options at once.

EverQuote is the largest online marketplace for insurance in the US, so you’ll get the top options from more than 175 different carriers handed right to you.

Take a couple of minutes to answer some questions about yourself and your driving record. With this information, EverQuote will be able to give you the top recommendations for car insurance. In just a few minutes, you could save up to $610 a year.

3. Get Money Back Every Time You Go Grocery Shopping

You know couponing is a guaranteed way to save more money when you go grocery shopping — but it’s downright time consuming. Instead, you could just get rewarded for buying what you already shop for. No clipping required, and you’ll still be able to add more money to your emergency fund every month.

A free app called Fetch Rewards will reward you with gift cards just for buying toilet paper and more than 250 other items at the grocery store.

Here’s how it works: After you’ve downloaded the app, just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch. For your efforts, you’ll earn gift cards to places like Amazon or Walmart.

You can download the free Fetch Rewards app here to start getting free gift cards. Over a million people already have, so they must be onto something…

4. Get Paid $225/Month While Watching Movie Previews

If we told you that you could get paid while watching videos on your computer, you’d probably laugh.

It’s too good to be true, right?

But we’re serious. By signing up for a free account with InboxDollars, you could add up to $225 a month to your pocket. They’ll send you short surveys every day, which you can fill out while you watch someone bake brownies or catch up on the latest Kardashian drama.

No, InboxDollars won’t replace your full-time job, but it’s something easy you can do while you’re already on the couch tonight, wasting time on your phone.

Unlike other sites, InboxDollars pays you in cash — no points or gift cards. It’s already paid its users more than $56 million.

Signing up takes about one minute, and you’ll immediately receive a $5 bonus to get you started.

5. Find Out if You’re Overpaying

Think of all the times you’ve overpaid… and how much money you could have saved in your emergency fund, if someone had just told you before you swiped.

That’s exactly what this free service does.

Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million.

You can get started in just a few clicks to see if you’re overpaying online.

Capital One Shopping compensates us when you get the extension using the links provided.

6. Ask This Website to Help Pay Your Credit Card Bill This Month

Every month, you make payments toward your credit card debt. But you never seem to make a dent. It’s because of those sky-high interest rates — as much as 24% interest. It can feel impossible to get ahead.

But MoneyLion could help you find offers to cut your interest rate by 70% as soon as tomorrow.

Here’s how it works: MoneyLion can match you with new loan offers at a lower interest rate — as low as 5.20% APR*. That’s 70%* lower than the average credit card interest rate. And it’s the key to finally getting ahead.

You can use this new loan to pay off all your existing credit card debt, leaving you with one (cheaper) monthly payment that will help you get out of debt faster.

If you have a credit score of at least 620, you could get up to $100,000. With no collateral. And terms go up to 144 months.

Worried you won’t qualify? Take two minutes to check online and see if you could cut your credit card interest rate by 70%.

*Based on creditworthiness. Average credit card interest rate is 24.72% as of 8/14/24, according to Forbes Advisor’s weekly credit card rates report.