My husband and I were discussing the importance of our emergency fund yesterday, and speculating about how much you really need to have in an emergency fund.  The general advice is to have six months’ of living expenses saved up at all times.  While this may work for some families, those hit hardest by this economy may argue that more savings would be wiser.

If you are employed and can expect to receive unemployment benefits if you are laid off, six months is probably a very generous amount and will be enough to see you through until you find a new job.  For the self-employed, six months may not be enough.  When you are self-employed, there is no safety net like unemployment and whatever you have in savings is what you will live on.

Sometimes, employment status makes no difference.  If you are injured while not working, you will not receive any unemployment or other benefits.  Do you have enough money to survive something like that? What would happen if you were fired instead of laid off?  In most states, unemployment is not available when you are fired, so emergency savings might be your lifeline.

No matter what your personal circumstances are, having an emergency fund is essential.  Even if you don’t have much extra to put away, make a goal of getting to at least three months’ worth of expenses saved up, and then shoot for six.  Your emergency fund could someday be the difference between staying afloat and sinking during a financial crisis.