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

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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. Earn Up to $225 For Your Emergency Fund Just For Going Down a Rabbit Hole on Your Phone

We’ve all been there. You sit down at the end of the day to unwind on your phone, and suddenly it’s two hours later, and you’re in the weird part of YouTube again. How did I even get here? 

But you don’t need to feel guilty about it anymore. Research companies will actually pay you to go down these video rabbit holes.

You could add up to $225 a month to your pocket by signing up for a free account with InboxDollars. They’ll present you with short video clips to choose from every day, then ask you a few questions about them.

You just have to answer honestly, and InboxDollars will continue to pay you every month. This might sound too good to be true, but it’s already paid its users more than $60 million.

It takes about one minute to sign up and start getting paid for your nightly zone-out.

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

No, like… the whole bill. All of it.

While you’re stressing out over your debt, your credit card company is getting rich off those insane interest rates. But a website called Fiona could help you pay off that bill as soon as tomorrow.

Here’s how it works: Fiona can match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.

If your credit score is at least 620, Fiona can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 5.20% and terms from 4 to 144 months.

Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.

All that credit card debt — and the anxiety that comes with it — could be gone by tomorrow.