Does having two incomes affect how much you have in an emergency fund?

[Anonymous]

Wondering if having two incomes affects the calculus for amount in an emergency fund. Do you feel comfortable having less because of the unlikelihood that both earners will lose their jobs at the same time?

[Anonymous]

Ha. We went to one income which quickly led to the disappearance of the emergency fund. I think the "two income trap" covers the other side of the argument.

[Freeman]

I would look at it from the other direction. Can you cover all of your necessary bills on just one income? If so, and you think the odds of losing both incomes are low enough, then you can take that into account when deciding on a comfortable amount for your fund.(This is actually my situation, since my wife and I make similar amounts, but are in entirely different career fields.) That does only cover the case of job loss though, and you also have to take into account unexpected expenses that could be unrelated to work and income. So yes, it can affect the formula, but it shouldn't be the only deciding factor.

[Anonymous]

I considered expenses, not income when establishing my emergency fund.

[Anonymous]

Anonymous wrote:I considered expenses, not income when establishing my emergency fund.

+1

[Anonymous]

No. As pointed out above, the emergency fund is based on how much it costs for us to live per month. And it is cheaper when one of us is unemployed. In 2009 when I was unemployed I cut our monthly expensive by about 1/3 because I was able to spend a lot more time coupon hunting, cooking at home (we ate out a lot back then). I usually eat lunch out at work, but then I was eating lunch at home every day. I also saved money on gas not commuting daily. I now know that the monthly rate for our emergency fund is about 75% of what I had thought it would be.