# what's a good target for equivalent salary put away for a rainy day? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [April 29, 2009, 8:33pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766 "2009-04-29T20:33:28Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [April 29, 2009, 8:33pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/1 "2009-04-29T20:33:28Z")
purely academic question (I hope!) - what’s the current recommendation for how many months’ salary you should try to save in easily liquid form, in case you suddenly lose your job? I’ve seen a variety of estimates kicking around, and wondered if there’s a consensus out there? ---
**Author:** ![Hedda\_Rosa](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hedda_rosa/32/1204_2.png) [@Hedda\_Rosa](https://boards.straightdope.com/u/Hedda_Rosa)\ **Post date:** [April 29, 2009, 8:37pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/2 "2009-04-29T20:37:21Z")
3 - 6 months is what I’ve always heard. ---
**Author:** ![Kalhoun](https://avatars.discourse-cdn.com/v4/letter/k/3bc359/32.png) [@Kalhoun](https://boards.straightdope.com/u/Kalhoun)\ **Post date:** [April 29, 2009, 8:40pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/3 "2009-04-29T20:40:15Z")
During hard times, I’ve been hearing 6 months to a year. ---
**Author:** ![Greg\_Charles](https://avatars.discourse-cdn.com/v4/letter/g/839c29/32.png) [@Greg\_Charles](https://boards.straightdope.com/u/Greg_Charles)\ **Post date:** [April 29, 2009, 8:43pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/4 "2009-04-29T20:43:45Z")
There’s a lot more information we need. How long might it take to find another job? This can depend on your industry, and the current climate. Is there interim work you could get until things improve? Could you go into austerity mode to reduce your spending temporarily? By what percentage? Will you qualify for unemployment benefits? If you run totally out of money, is there some safety net for you? (e.g., friends or family, crime.) Do you have a working spouse, or children you can sell to medical research? We could then plug all the data into a massive formula, which would invariably spit out six months, or possibly half a year depending how you set up your units. ---
**Author:** ![Claire\_Beauchamp](https://avatars.discourse-cdn.com/v4/letter/c/ec9cab/32.png) [@Claire\_Beauchamp](https://boards.straightdope.com/u/Claire_Beauchamp)\ **Post date:** [April 29, 2009, 9:17pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/5 "2009-04-29T21:17:59Z")
“The experts” used to say three months. The advice I’ve heard for the last five years or so has migrated to six months to a year. ---
**Author:** ![Caldazar](https://avatars.discourse-cdn.com/v4/letter/c/8e8cbc/32.png) [@Caldazar](https://boards.straightdope.com/u/Caldazar)\ **Post date:** [April 29, 2009, 9:26pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/6 "2009-04-29T21:26:49Z")
Depends on your risk tolerance, I guess. Latest economic data shows that the average unemployment duration is about 20 weeks. This duration should rise as the unemployment rate continues to rise. About 1/3rd of the pool of unemployed are currently getting hired each month, but this hiring rate is dropping as the pool of currently unemployed expands and hiring declines (separations are currently out-pacing hires at about 11-to-10). These are just the averages; the reality would totally depend on your specific situation. Shooting for a savings of 40-60 weeks of living expenses doesn’t seem unreasonable to me, though. ---
**Author:** ![Yllaria](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/yllaria/32/3452_2.png) [@Yllaria](https://boards.straightdope.com/u/Yllaria)\ **Post date:** [April 29, 2009, 9:28pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/7 "2009-04-29T21:28:40Z")
I’ve also heard 3-6 months. Never had anything close to that in savings, personally. Had a month’s salary in savings bonds once. ---
**Author:** ![Khadaji](https://avatars.discourse-cdn.com/v4/letter/k/9e8a1a/32.png) [@Khadaji](https://boards.straightdope.com/u/Khadaji)\ **Post date:** [April 29, 2009, 10:27pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/8 "2009-04-29T22:27:03Z")
I have heard 6 months, but I am more comfortable with 12. ---
**Author:** ![ParentalAdvisory](https://avatars.discourse-cdn.com/v4/letter/p/53a042/32.png) [@ParentalAdvisory](https://boards.straightdope.com/u/ParentalAdvisory)\ **Post date:** [April 29, 2009, 10:36pm UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/9 "2009-04-29T22:36:47Z")
I never really liked the 3-6 month suggestion by “experts”. It should be based on your expenses and individual needs, and not so much salary. Add up your expenses for one month (include only Needs, not Wants), and multiply that by the amount of months you’ll think you’ll need if you’re out of work. Then… save that much if you can. If it takes you a year to find a job, you’ll need to save that much in expenses. If it takes you 6 months, well then you need that much worth in expenses. Of course, nobody every knows how long it will take, but you could make educated guesses based on your field. ---
**Author:** ![Patch](https://avatars.discourse-cdn.com/v4/letter/p/a183cd/32.png) [@Patch](https://boards.straightdope.com/u/Patch)\ **Post date:** [April 30, 2009, 12:15am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/10 "2009-04-30T00:15:14Z")
> [@Yllaria](#): > > I’ve also heard 3-6 months. Never had anything close to that in savings, personally. Had a month’s salary in savings bonds once. Yeah… that’s always been my problem. It takes me over a year to safely squirrel away a month’s salary equivalent, assuming nothing goes wrong during the year (ha!) and I decide not to put anything into my IRA. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [April 30, 2009, 12:29am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/11 "2009-04-30T00:29:09Z")
> [@ParentalAdvisory](#): > > I never really liked the 3-6 month suggestion by “experts”. It should be based on your expenses and individual needs, and not so much salary. Add up your expenses for one month (include only Needs, not Wants), and multiply that by the amount of months you’ll think you’ll need if you’re out of work. Then… save that much if you can. If it takes you a year to find a job, you’ll need to save that much in expenses. If it takes you 6 months, well then you need that much worth in expenses. Of course, nobody every knows how long it will take, but you could make educated guesses based on your field. I think this is a really important point–for example, it’s better to pay off debt than to accrue debt but save money that you’d later need to use to service that debt. It’s amazing how cheaply one can live if one is debt free. Of course, along with this advice goes the reminder that if you do lose your job you have to cut down expenses immediately. There is a lag between entering “frugality mode” and it actually kicking in–bills continue to come in for a while–and that can deplete emergency funds. ---
**Author:** ![Spoons](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spoons/32/3141_2.png) [@Spoons](https://boards.straightdope.com/u/Spoons)\ **Post date:** [April 30, 2009, 12:40am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/12 "2009-04-30T00:40:16Z")
I’ve always heard three to six months, but given today’s economic climate, I’d be more comfortable recommending six to 12. You just never know, so erring on the side of caution seems to me to be the best. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [April 30, 2009, 12:51am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/13 "2009-04-30T00:51:14Z")
> [@ParentalAdvisory](#): > > I never really liked the 3-6 month suggestion by “experts”. It should be based on your expenses and individual needs, and not so much salary. Add up your expenses for one month (include only Needs, not Wants), and multiply that by the amount of months you’ll think you’ll need if you’re out of work. Then… save that much if you can. If it takes you a year to find a job, you’ll need to save that much in expenses. If it takes you 6 months, well then you need that much worth in expenses. Of course, nobody every knows how long it will take, but you could make educated guesses based on your field. Also what your household income is without yours - we are a two income family that can live off either one of our incomes. Keep in mind that no one wants to live at a “need” level for six months or a year as well. Unemployment will drag on you - and you’ll want to eat something other than rice and beans, go out to a movie once in a while, and keep your house warmer than ‘keep the pipes from freezing.’ ---
**Author:** ![ParentalAdvisory](https://avatars.discourse-cdn.com/v4/letter/p/53a042/32.png) [@ParentalAdvisory](https://boards.straightdope.com/u/ParentalAdvisory)\ **Post date:** [April 30, 2009, 1:05am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/14 "2009-04-30T01:05:30Z")
> [@Dangerosa](#): > > Unemployment will drag on you - and you’ll want to eat something other than rice and beans, go out to a movie once in a while, and keep your house warmer than ‘keep the pipes from freezing.’ No doubt. One must budget these factors in. _Needs_ are a starting point. If you want to factor in better food, more heat, and general entertainment, one must factor those in after the _Needs_ part is taken care of. But since a lot of people say don’t even have 6 months, well, _Needs_ are where they should concentrate, don’t ya think? Then if there’s any left over, budget it in. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [April 30, 2009, 1:33am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/15 "2009-04-30T01:33:28Z")
> [@ParentalAdvisory](#): > > No doubt. One must budget these factors in. _Needs_ are a starting point. If you want to factor in better food, more heat, and general entertainment, one must factor those in after the _Needs_ part is taken care of. But since a lot of people say don’t even have 6 months, well, _Needs_ are where they should concentrate, don’t ya think? Then if there’s any left over, budget it in. Yep, but don’t get three months of bare bones living and then say “good 'nuf, I have my I get laid off fund, now lets go back to the regularly scheduled hookers and blow.” Another factor to consider…my company has a pretty good severance policy - and I have a month of vacation saved up. If I get laid off tomorrow, it would be Christmas before I’d go on unemployment. Since my husband is employed, we could get insurance through his employer. My husband has a similar policy at his job. That is a completely different situation than someone who would not get any severance or notice. ---
**Author:** ![Cunctator](https://avatars.discourse-cdn.com/v4/letter/c/43a26b/32.png) [@Cunctator](https://boards.straightdope.com/u/Cunctator)\ **Post date:** [April 30, 2009, 1:55am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/16 "2009-04-30T01:55:59Z")
I target a certain period of living expenses rather than a proportion of salary. I keep one account as an “emergency” account. It has roughly two years’ living expenses in it. ---
**Author:** ![miamouse](https://avatars.discourse-cdn.com/v4/letter/m/ad7895/32.png) [@miamouse](https://boards.straightdope.com/u/miamouse)\ **Post date:** [April 30, 2009, 4:35am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/17 "2009-04-30T04:35:30Z")
being that the economy + publishing industry = “holy shit” I’ve been trying to gather as much info as possible to make contingency plans in the event of a layoff. One of those things is “pay off debt, or hoard cash live a mofo for survival?” A friend sent me this link today: [http://www.usnews.com/articles/business/your-money/2009/04/03/suze-orman-and-the-new-rules-of-credit-card-debt.html](http://www.usnews.com/articles/business/your-money/2009/04/03/suze-orman-and-the-new-rules-of-credit-card-debt.html) > [@](#): > > Orman says that now, with the number of unemployed Americans rising, having an emergency savings fund is even more important than being debt-free. “The sad reality is that the credit card industry is taking actions to protect themselves with no regard to your needs or how good you have been in paying your bills on time,” she said, referring to the fact that credit card companies have been lowering credit limits, increasing interest rates, and revoking credit cards altogether. ---
**Author:** ![groo](https://avatars.discourse-cdn.com/v4/letter/g/ecd19e/32.png) [@groo](https://boards.straightdope.com/u/groo)\ **Post date:** [April 30, 2009, 4:59am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/18 "2009-04-30T04:59:21Z")
Being a little bit of a worrier, I assume I need to be able to survive having an asteriod demolish my car while it’s parked at work while I’m being shown the door. So, I have money for one new Honda Fit and 12 months expenses (assuming I have to suddenly start paying $350/month for COBRA). ---
**Author:** ![Desert\_Nomad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desert_nomad/32/177_2.png) [@Desert\_Nomad](https://boards.straightdope.com/u/Desert_Nomad)\ **Post date:** [April 30, 2009, 8:29am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/19 "2009-04-30T08:29:19Z")
12 months. ---
**Author:** ![Broomstick](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/broomstick/32/246_2.png) [@Broomstick](https://boards.straightdope.com/u/Broomstick)\ **Post date:** [April 30, 2009, 10:44am UTC](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766/20 "2009-04-30T10:44:00Z")
> [@miamouse](#): > > being that the economy + publishing industry = “holy shit” I’ve been trying to gather as much info as possible to make contingency plans in the event of a layoff. One of those things is “pay off debt, or hoard cash live a mofo for survival?” A friend sent me this link today: [http://www.usnews.com/articles/business/your-money/2009/04/03/suze-orman-and-the-new-rules-of-credit-card-debt.html](http://www.usnews.com/articles/business/your-money/2009/04/03/suze-orman-and-the-new-rules-of-credit-card-debt.html) > > > [@](#): > > > > Orman says that now, with the number of unemployed Americans rising, having an emergency savings fund is even more important than being debt-free. “The sad reality is that the credit card industry is taking actions to protect themselves with no regard to your needs or how good you have been in paying your bills on time,” she said, referring to the fact that credit card companies have been lowering credit limits, increasing interest rates, and revoking credit cards altogether. That Orman quote makes _no sense_ - if credit card companies are doing all that then it is EVEN MORE important to get rid of any form of credit card debt. We got out of debt years ago. A couple years ago, due to medical expenses, we put some money on the emergency credit card. As soon as the crisis was over we went to my credit union, took out a small loan, and paid off the plastic. That little credit union loan had a lower monthly payment and a 9% interest rate guaranteed to never change. Meanwhile, I see the interest on my friends’ credit cards go to 14%, 20%, and up… One of the best moves we ever made. When I was laid off in 2007 I walked out the door upset and a little freaked _but I didn’t owe anybody any money_. Which by the way, greatly extended the utility of my emergency fund. MY recommendation is 6 months of money in the bank. Admittedly, when I was laid off I had only about 3-4, but we managed. Now, after nearly 2 years of partial/spotty/intermittent employment I have about 3 months in the bank. When I get work I sock away anything I can. I’d like to have 6 months. If I really had my druthers I’d shoot for a full year, but that’s not going to happen until I get a steady, full time job for awhile. So, in summary - shoot 6 months. 1 year is even better. But 3 months is OK since, if you’re resourceful, you might pick up occasional short term work even in this economy. [Next page](https://boards.straightdope.com/t/whats-a-good-target-for-equivalent-salary-put-away-for-a-rainy-day/494766.md?page=2)