Is Saving 8 to 12 Months Expenses Even Possible Or Practical?

savings bank

I recently brought up the question of whether we now need 8-12 months expenses saved rather than the old three to six months that used to be convention. I think in these economic times, where we are seeing unemployment hitting rates we haven’t seen in decades, that three to six months isn’t enough.

I received a lot of great comments on the article.  Many agreed that 8-12 months  expense savings is a good idea while others agreed that we need to re-evaluate how much we have saved but that 8-12 may be reaching.  Some questioned if it was even possible or practical.

A big question that comes up: How does a person save up 8-12 months of expenses?!?

Let me first say I know it’s tough saving even 3-6 months of expenses.  I wouldn’t be surprised if most families don’t have even 3 months expenses saved no less 8-12 (please prove me wrong!).  But with unemployment rising it’s something we all have to think about.

I think it can be done!

The sooner you can put together your expense savings the better.  But that doesn’t mean you have to do it right this minute.  Don’t stress out completely because you can’t cover a year’s worth of expenses right now.  But at the same time look at what you do have socked away and ask yourself if you could save more, even if it’s only a little bit.  Work your way up.  Do you have three months expenses saved up?  No?  Set that as your goal.  If you do have three months work your way to six months expenses.  Squirrel away until you reach your goal.  If you never need it then great but should you have to use it you will be happy for everything you could save.

But does it have to be 8-12 months saved?

You need to look at your own situation.  Here are some questions to ask yourself:

  • What will happen if I lose my job?
  • Realistically how long would it take to find a new job at the same salary?
  • How much more will I need if I have to take a pay-cut?
  • How long can I support myself while looking for work?
  • How has my industry been affected by the economy?  Are whole companies going out of business or is it growing?
  • How is your company doing?  Are they hiring or letting people go?
  • What is the likelihood that I could get laid off (tough one to answer but be honest with this one.  Most people think a company can’t do without them but in most cases they are probably wrong).
  • What savings do I already have?
  • What would I get in unemployment benefits?
  • Are there any other money sources you could tap if needed (Stocks, bonds)?
  • Would or could you work part-time until you find full-time work?

And here are some items to think about when figuring out your expenses:

  • What must get paid every month (mortgage, car payment, electricity, phone bill, water)?
  • What do you spend on food every month?
  • What will health care cost?
  • What costs will there be in finding a new job (transportation, resumes, dry cleaning, clothes, fax, phone calls).
  • What other expenses will you have (car maintenance, home maintenance)?
  • What do you actually spend every month?
  • What can you cut back should you lose your job (cable, eating out, vacations, etc…)?
  • How many mouths does your income support?

Be honest with yourself. You may find that you don’t need 8-12 expenses.  But you’ll be better served to save a bit more than a bit less.

What do you think?

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Published or updated August 21, 2016.


  1. In this economic climate, there is no such thing as being too careful or saving too much. I think it is more than practical; it’s the smart and considerate thing to do, especially if you have dependents.

    It’s also more fair to people who care and worry about you, i.e. parents or relatives who have to worry about their own situations, but also never stop worrying about you no matter how old you are. If you get in trouble with your finances, it’s hard on them, too.

    Penelope @ Pecuniarities’s last blog post..Carnival of Pecuniary Delights Giveaways: Cute Piggy Bank Magnet Prizes for Hosting and Submissions

  2. You made a good point in that you to evaluate what your actual living expenses are. What my husband and I spend every month is a lot different than our actual necessary living expenses. Last weekend we went out to dinner, I bought something on eBay the other day…these are things we purchased that we would not include in our monthly living expenses when calculating emergency fund savings because they are extras that would immediately be cut out of our lifestyle if need be. You may look at what you spend each month and think it is a huge number, but if you think about what you absolutely HAVE to spend every month to survive vs. what you actually spend on fun extras, you might be surprised to find that saving up several months’ bare-bones living expenses is not as difficult as it may seem.

    Hannah’s last blog post..Timothy’s World Coffee

  3. We have 6 months of expenses saved, and we’re halting our extra debt payments right now and putting the money in savings.

    My husband’s company just announced that they’re going to lay some people off — scary! So I think it’s best for us to pile on the savings right now.

    I don’t know how long our health insurance would last if he lost his job. COBRA is expensive. Maybe we could take out a temp. health insurance policy to tide us over.

    I do think it’s possible to save 8-12 months of expenses. Sure, it might take awhile, but if you build it up gradually and throw your little windfalls into it, it can be done.

    Kacie’s last blog post..Car loan change of plans — again

  4. “I wouldn’t be surprised if most families don’t have even 3 months expenses saved no less 8-12 (please prove me wrong!).”

    I think it’s safe to say that most American families don’t even have one month of expenses saved up.

    It’s nice to see that the average saving rate is increasing, but when you start out at next to nothing, it will take a very long time to get to 3-6 months worth of expenses.

    DD’s last blog post..Help Wanted – Cobblers Needed During A Recession

  5. If your salary is high enough and you live below your means, sure it sounds like it could be possible, would just have to live more frugal elsewhere. Could take years and years to get too that point. But like you mention, any start is a good start.

  6. Well, I think it’s certainly do-able. I think anyone making over $30,000 a year should be able to save 8-12 months of expenses (over time, anyway). Might be harder for those making less.

    That said, my question is: If you have debt, is it smart/responsible to save up that much in expenses rather than use, say, half of that to pay down debt. At least credit card debt. Then you have a back-up (if an undesirable one) if emergencies/layoffs persist longer than 3-6 months.

    Abigail’s last blog post..It’s a pity party — and you’re invited!

  7. The expenses incurred while job hunting is a big one many people don’t consider. Just because you may work in a casual environment/industry, you still have to dress up for interviews. The cost of new clothes (if you don’t already have anything) tailoring, dry cleaning, etc can add up. I’m already going through my closet not to see what I have in a pinch. Then there are transportation costs especially if you don’t have to commute or travel far currently.

    The healthcare costs are a big one for me. I’m going on disability next week and I wonder what would happen if I were to lose my job while I’m out. Not only the costs but my ability to even look for another job. Sure, I am working on self-employment (see my blog and website) but that takes time.

    Carla’s last blog post..Eco Fashion: Do it yourself – Organic Fabric

  8. In these times it is certainly practical and for most it is as possible today as ever.

    Most folks are still employed so saving their money today is no different than at any other time. If someone is snowballing then put that on hold and build up the emergency fund to a more comfortable level. You’ll using the same fiscal muscle just to a differing abjective.

    If you’re not debt free but also not being agressive in attacking your debt, then you’ll likely to find saving as impossible today as you once considered getting out of debt. That’s a mindset in need of adjustment in any economic climate.

    For those out of work – and I am one of these folks – then it is a different world and I’ve written about this so I won’t take that on now. You and I are exceptions to my generalize commentary.

    Even if unemployment soars to 10% there are still 90% still employed. For these folks, saving and/or paying off debt is as easy (or hard) as it has ever been. Don’t let the economy be your next excuse for not saving…

    For too many, the story is like this… “the economy is booming and the value of my house is soaring so why save and worry about debt…” “oh no, the economy is in the crapper, who can save and pay off debt in a time like this…”

    Ha, grow up and pick a lane, and if you need any guidance just remember that debt is bad and savings are good…

    OK, enough rant… thanks for allowing me the opportunity!

    Do You Dave Ramsey?’s last blog post..I make $10.50 an hour

  9. We were cutting back our budget as much as we could to make overpayments on the mortgage, however this year we put these on hold to save one year’s expenses – we both work for the same company and if the worst was to happen we could both be out of a job.

    Good post!

  10. I agree w/ Penelope. I think there is no such thing as saving too much.

  11. I believe it can be done as well. Just discipline yourself to do it, budget for it, and make sure that you treat it like an expense- like a liability that needs being paid off, and you’ll do it.

    Great post.

  12. Personally, I think it’s feasible and even more important to be thinking along these lines in the current climate. Everyone needs a fallback solution although 8-12 months will be a stretch for most of us. The question is more, what if I don’t start taking measures and things go negative!

  13. I think 12 months is necessary but depending on your situation.

    Although it would make sense especially with the job market and even more risky if you own a house.

    But me as a 20 something living at home, i would still save up around 6 months and the rest put into investing and still progress to increase the savings each month.

  14. A hard number is foolish, 3,6,8 or even 12 months. It all depends on so many different variables. For starters, have you been with your company for 20 years, and do they give a week pay for each year you’ve logged. If so, that’s about 5 months right there. Consider that you won’t be investing 15% of every monthly paycheck into your 401k; you’ll be getting 20-50% of your pay in unemployment benifits. That puts you at about 8-11 months right there, pending on what state you live in and your current salary. In real dollars, it’s not has hard as you think it is. Save some, spend some and live the rule of moderation. Most important is to pay those life insurance premiums on time, if you have dependent family.

  15. Michael says:

    It absolutely is possible to make this happen. I started real estate almost 23 months at the age of 23 completely broke and my father was supporting me on a shoe string budget.

    By the time my 2nd year in real estate ends (in about 30 days) I will have 22.64-24 months of expenses in my bank accounts. This includes my car car payment and insurance, rent, business expenses since I am an independent contractor, cell phone, gas/food/entertainment expenses incurred throughout the month, and $200 extra dollars for clothes or entertainment purposes a month.

    I’ve always wantd to walk the thin line of being liquid in my savings and bank accounts but being able to live a really nice life with nice toys. For instance I bought my self a mercedes cls 550 about 7 months ago, and paid cash for a $10,000 gold rolex because those things we’re important to me. Every one has different things they want and those we’re things I wanted.

    Looking ahead to the future I want in a year and a half to have 30 months of cash flow for all my expenses and this includes adding a condo purchase and another luxury car to my monthly expenses plus the extra expenses both of these purchases will include such as down payments for both, and fully furnishing the condo.

    Dream, save, buy, and become financially free while also havin a nice life. That’s heaven on earth to me.

    I will say that in order for me to get to the point I’m at today I’ve had to life pretty cheaply and save..I wait an entire year to purcahse my mercedes and waited almost 2 years to buy the watch. You create a plan of what you want out of life and just work it. That’s my 2 cents

  16. I’d say you need at least 3-years of living cost in the bank if you are the only income earner for your household. Just basic living- rent- car pmt- property taxes, some food, etc.

    If your spouce works and makes about what you do- then I’d say have 1.5 years worth of savings.

    Also consider the cost of relocating you and your family to find work.

    I’d say live below your means and drive that car for a few more years,
    consider renting/buying a smaller house, get a more basic cable and internet packages, shop a discount retail, buy used stuff for the house at flea markets, etc.

    I’d say you can save 36-months over severl years with no problem

  17. Jacquelin Cummins says:

    I would like for someone to tell me how a person who become unemployed and has no income to save 9 months of backup expenses. Its not possible.

What Do You Think?