Here is how much cash you need available to be safe during a recession

These first 6 months of 2022 have been a bloody mess for the stock market. With the S&P 500 dropping more than 20%.

At this point, the future is not looking too good. Confidence in our economy is being weakened. Due to a lot of uncertainty with the stock market volatility, more potential inflation, additional supply chain shortages, and the conflict happening in Ukraine. 

With all this happening you can see why over 50% of adults are worried about not having enough in their emergency funds.

People are concerned about falling short, and I can see why, bc around 30% of Americans reported they have less than three months of expenses saved up in their emergency fund, and the worst part is around 25% of Americans have reported having zero money saved up in an emergency fund.

It is critical to always have an emergency saving account to help you pay for all your survival expenses. When I say survival expenses I am talking about having money for food, house, and vehicle expenses.

I am not talking about the extra fun spending you normally do when you have a steady income. In the case of an emergency, you will have to slash any unnecessary spending that is not a necessity like food, housing, and vehicle.

With all this in mind here is how much in emergency cash savings you need to set aside based on what types of incomes you are bringing into your household.

If you are a Dual-income household or retiree: you need to have at least 3 months worth of expenses saved up in your savings.

The normal recommendation by financial advisors for a household with both partners having an income is to have at least 3 to 6 months of living expenses. This will help you hold you off if one or both of you get your hours cut or if you lose your jobs. It will help you while you find a new job and not have to worry about losing your houses, cars, or even have to worry about feeding your family. 

If you are a Single earners household: you need to have at least 6 months worth of expenses saved up in your savings.

If you are a single-earner household you are at higher risk, so in lieu of the 3 to 6-month savings dual earners need to save up, you will need to save up between 6 to 9 months of emergency savings.

Keep in mind the more you can save the better you will be. These 3 to 6 for dual earners and 6 to 9 for single earners are just minimum recommendations.

If the current potential recession gets worse and companies begin to lay off in your area you are going to need the support these fully funded emergency funds have to offer. Finding a new job during a recession may not be so easy, so make sure you have a backup plan in place. If you are unhappy with your current job make sure you find a new job before you decide to quit your current job, bc as mentioned earlier finding a new job might not be so easy. 

If you are Entrepreneurs and have your own business: you need to have at least 1 year's worth of expenses saved up in your savings.

To all my entrepreneurial friends out there listen up closely. I know starting a business and running your own business comes with many challenges. Making sure your business is financially healthy, to me is the most challenging part.

One thing we all learned in 2020 is that we need to be prepared for the unthinkable. Businesses that had money saved up were able to withstand the shutdowns better than the businesses with little to no emergency money saved up. 

It took many businesses up to a year to get back to the same sales levels as before 2020. With that in mind, it is highly recommended to have no less than 1 year of expenses saved up in an emergency savings account.

I understand all these recommendations might sound like too much and many of you might feel uncomfortable having that much in cash sitting around in a bank doing nothing.

I also understand not everybody is in the same situation and some people might have some pensions or other sources of income that can help them out during a recession or if they lose their jobs.

These recommendations I am giving you here are not set in stone. Coming up with what you feel comfortable with and what you are capable of saving is going to require some deep thought on your end. This can be an emotional topic for many of you, but it is always better to have it and not need it than the need it and not have it.

I also know the stock market is currently down and many of you might be tempted into investing in lieu of saving. At the end of the day, it is up to you to make the hard choices and make sure you are protecting and taking care of yourself, bc if there is one thing I have learned in life is that nobody is going to take care of you the same way you would take care of yourself.