Most people have heard the tried-and-true advice: Always have an emergency fund filled with three to six months’ worth of expenses in an account you can access at any time. It’s for those “rainy days” when your car breaks down, or your basement floods, or — god forbid — you lose your job unexpectedly.
Many of us have followed that advice, too. In 2020, 55% of adults in the U.S. said that they had set aside an emergency fund that could cover at least three months’ worth of expenses, according to data from the Federal Reserve.
But how accurate is that rule of thumb today? The last two years have brought seismic shifts in the way we think about work and money. Job quits are hovering at an all-time high, and entire industries have been thrown into flux by the pandemic. Millions of people, particularly those in restaurant and hospitality jobs, have faced furloughs and layoffs. And rising inflation is making a dent in all of our wallets.
What does all this mean for our rainy day stashes?