You Might Need a 12 Month Emergency fund — Here’s How to Get It

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. Start Your Emergency Savings Fund in a High-Yield Account and Earn 16x the Average Interest

If you don’t have an account for your emergency fund, get one. Keeping cash under your mattress or in your sock drawer isn’t very safe at all, plus it’ll get you nothing in interest — not much less than an average savings account, though.

But an account with Aspiration lets you earn up to 16 times the average interest on the money in your account. And it will earn you up to 5% back every time you use the debit card.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

3. 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.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 straight into your emergency fund just for taking a few minutes to look at your options.

4. 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…

5. 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.

6. 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.

7. Stop Paying Your Credit Card Company

Your credit card company is ripping you off with insane interest rates — some up to 36% — making you pay extra money each month that could be going to your emergency savings instead.

But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

You don’t need a perfect credit score to get a loan — and comparing your options won’t affect your score at all.  Plus, AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes less than a minute and just 10 questions to see what loans you qualify for — you don’t even need to enter your Social Security number. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

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