Emergency savings can be a lifeline. They help when unexpected events, like medical bills or job loss, disrupt your life. Putting money in a high-yield savings account can help you handle unexpected costs. This might include medical bills or even losing your job. Just like diversifying your interests — whether it’s preparing financially or exploring all-in-one betting content from 22Bet — having the right strategy matters.
The common rule of thumb from financial advisors is to set aside enough to cover three to six months of essential expenses. Yet, the pandemic has caused many to reconsider this guideline.
“Conventional advice doesn’t always fit the moment,” says Lynnette Khalfani-Cox, also known as The Money Coach® and author of Zero Debt. “People still cling to the three-to-six-month rule, but it doesn’t always reflect reality.” That misses the point.”
We asked Khalfani-Cox and a top economist for their views on saving during a crisis.
How Much to Save, from a Personal Finance Expert
According to Khalfani-Cox, saving that much simply isn’t workable for many. More than 40 million people are unemployed, and the pandemic continues. So, that level of savings is out of reach for most. So, this advice isn’t practical anymore.
“It’s unrealistic to expect someone on a tight budget or unemployment to save six months’ worth of expenses.” It can feel misleading,” Khalfani-Cox says.
Saving something is important, but the right amount depends on what you earn and what feels doable for your situation.
Let your current income guide how much you save. If you’re earning 25% less than usual, adjust your savings accordingly. Even setting aside $25 per paycheck matters. “Each person has to assess their numbers and adjust based on what’s real for them,” says Khalfani-Cox.
How Much to Save, From an Economist
Emily Gallagher is an economist. Gallagher also teaches finance at the University of Colorado Boulder, where she serves as an assistant professor. She worked on a report in 2019 called “Rules of Thumb in Household Savings Decisions.” It suggested saving at least $2,467. Yet, she now says her past advice doesn’t fit the current crisis.
Gallagher analyzed data from 2010 to 2012. He found that American households earning under 200% of the poverty line need $2,467 in savings. This figure shows about one month’s income for low-earning households. For a family of four, that’s roughly $30,000 a year. It also represents nearly 30% of the U.S. workforce.
For many low-income households, saving $2,467 feels doable. Their monthly savings usually add up to a few hundred dollars. So, aiming for six months of expenses isn’t practical. Gallagher pointed out that a small financial cushion can help avoid serious issues. It can keep you from missing rent, falling behind on bills, or needing to skip medical care.
While it’s a strong savings goal, it’s uncertain how much people should save in today’s economy.
“The ideal savings amount hinges on what kind of support the government provides,” Gallagher notes. “Right now, there’s no way to predict how that will play out — it’s anyone’s guess.”
The government’s help so far, like stimulus checks and better unemployment benefits, offers rare chances to save money. If you’re out of a job but able to cover your essentials, consider setting aside even a small part of temporary aid. For example:
- Save a percentage of the $600 weekly unemployment supplement.
- Hold back a part of the $1,200 stimulus check.
- Use tax refunds, if available, to pad your emergency fund.
- Automate transfers to savings when any extra cash hits your account.
- Focus on savings over non-essential purchases when possible.
If you used your initial relief money, plan to save any aid you get later this month.
Simple Ways to Free Up Cash for Savings
Khalfani-Cox suggests that people take a moment to reassess. They should think about which old rules to set aside for now.
Here are two tips she offers to help you improve your financial habits and save more money.
1. Only Make the Minimum Payment
In normal times, paying your full credit card balance every month is the smartest move. If you’re anxious about your job or have lost hours or pay, it may be best to make only the smallest payments for now. This will grow your balances over time. That can raise your credit use rate and possibly lower your credit score. Yet, it helps you keep a history of consistent, on-time payments.
“Right now, cash is king,” Khalfani-Cox says. “We don’t know how long you’ll need access to that extra cash you’re currently putting toward debt,” she says. She stresses that paying off credit cards is important for the long term. However, she thinks short-term flexibility is more crucial at the moment. Interest can add up fast. Yet, during uncertain times, managing your cash may come first.
If you’re in a tight spot financially, here’s how to temporarily balance debt and savings:
- Make the least payments. This keeps your account in good shape without using up your cash.
- Keep the difference: Rather than putting extra money on your debt, save it instead.
- Cut non-essentials: Pause dining out, subscriptions, and unnecessary spending.
- Track your credit use: Don’t allow your credit card balances to get too high above your limit.
If you owe $6,194 and pay $200 a month, switching to a 2% minimum payment means you’ll pay about $123.88. This lets you save the rest. You’ll then save the rest, which is $76.12.
Be careful with your spending while using this approach. Focus on saving whenever you can.
2. Save in a Cyclical Manner
To save cyclically means your savings ebb and flow with your income stream. Let’s say your income drops by 25% this month — your savings goal should adjust by the same percentage. This method suits those with irregular incomes, like self-employed workers. It’s important now because many are seeing a fall in their earnings.
“Consistency is where the discipline kicks in,” she explains. “You’re training your financial muscle — even if what you save each month changes.”
When your finances begin to stabilize, that’s the time to shift your focus back to tackling credit card debt.
Final Thoughts
The economy is uncertain, and there’s a public health crisis. Because of this, people are facing serious challenges. No matter how small, every bit you’re able to save can make a meaningful difference.
“Millions of people are feeling even more financially stuck than they were a few months ago,” Khalfani-Cox says. “What they need is a sense of hope — a reminder that they’re not alone, and that recovery is possible.”
If saving three to six months’ worth feels hard, think about what you can achieve. Stay hopeful and don’t lose faith.