Here’s How Much Cash You Need Stashed if a National Emergency Happens

Here’s How Much Cash You Need Stashed if a National Emergency Happens

Jaime Catmull   Sun, April 10, 2022   GOBankingRates

You've probably heard time and again that it's important to have a rainy day fund set up "just in case" something unexpected were to happen. But we're now at a time when having an emergency fund is more vital than ever.

The coronavirus pandemic was a prime example of how something unexpected can have devastating effects on the economy at large and on an individual level, too. While we all hope the worst of it is over, here's how to be prepared in case it's not -- plus how to set up a fund for unexpected future national emergencies. 

Why You Need a National Emergency Fund

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times. When you can't rely on accessing your funds electronically, you'll need some legal tender to buy food, gas or other necessities.

"Whether it's Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand," said Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. "Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days' worth of spending money, just in case."

How To Decide How Much To Save

To decide how much to save for an emergency fund, you'll need to ask yourself a couple of questions:

How much will I need for an extreme catastrophic event?

How much can I afford to save?

"It's wise to have a small amount of physical cash at home for the truest of emergencies when banks are not operating," said Priyanka Prakash, managing editor at Fit Small Business, a company that finds the best small-business software, services and financing options.

Aim To Save $2,000

"Individuals should be prepared to pay for essential or non-discretionary expenses out-of-pocket," said Brett Tharp, CFP and financial planning education consultant at eMoney Advisor. "Temporary lodging or shelter, fuel, food, water and necessary medications fall into this category. This will differ for each person depending on their level of preparedness or perception of how likely a catastrophic event might be.

"Two-thousand dollars should cover those costs. "The rule of thumb I advise my clients is to keep $1,000 to $2,000 in cash in case banking operations are shut down due to a national emergency or catastrophe," said Gregory Brinkman, president of Brinkman Financial in Tulsa, Oklahoma.

There's No 'Magic Number' for How Much To Save in Your Emergency Fund

Despite these suggestions and what some other experts might advise, though, there's no magic amount you should have nestled away in your emergency fund. The answer for how much you should save for an emergency situation is that you should do what feels right to you.

No matter the amount, an emergency fund is absolutely necessary — so make it a priority to build one. Even if you can't afford to save much, it's better to save something rather than nothing, Prakash said. So if you can only afford to set aside $1,000 for an emergency fund, that's better than not saving at all.

The Cost of an Emergency Kit

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