Should you aim high or low in the 3 to 6 months’ saving range?

There is a lot of debate about how much money you should have in your emergency account and what exactly constitutes an emergency. In general, experts recommend keeping three to six months’ worth of living expenses in an accessible account. I agree; however, how do you know if you should aim high or low in such a huge range?

The answer may depend on your risk factors. For example, people who live and work in markets that have high financial risk, like Nevada, should probably err on the side of caution. (I’m sorry to pick on you Nevada, but your residents do face higher financial risk than people who live in some other areas of the country!)  

-In April, Nevada was one of the 10 states with the highest unemployment rate.

-Nevada has the second highest state average bankcard debt (at $6,638) and the highest incidence of credit card delinquency (2.04 percent).

-In 2008, Nevada had the nation’s highest state foreclosure rate

You get the idea, so I’m going to stop picking on Nevada and get to the point: the higher your risk of experiencing a financial emergency, the higher your emergency savings account should be.

For example, you might choose to aim low if you…

-Are part of a dual income family
-Have assets that you could sell if necessary
-Work in a field that is experiencing growth
-Are actively working on repaying debt -Are risk tolerant

You might choose to aim high if you…

-Are the sole wage earner
-Care for a large family
-Live in an area that is greatly impacted by the recession
-Have health problems
-Are risk averse

If you still aren’t sure how much to save, remember that this does not have to be an either/or situation and that any savings is better than no savings.  The key is to begin expecting the unexpected.


Kim McGrigg is the former Manager of Community and Media Relations for MMI.

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