Emergency fund breakdown: how much you really need to save

As someone who works in the skilled trades industry, you know better than most how important financial preparedness can be. Having an emergency fund can mean the difference between weathering a financial storm and finding yourself in a dire situation. So how much do you really need to save in an emergency fund? The answer, as with most financial questions, depends on a variety of factors.

First, let’s define what an emergency fund is. This is money set aside specifically for unexpected emergencies. The funds should be easily accessible, ideally in a savings account or another low-risk, interest-bearing account. Emergency funds are not for planned expenses like a vacation or down payment on a new car.

Now, let’s dive into how much you should save. Financial experts typically advise having three to six months’ worth of living expenses saved in an emergency fund. However, for those working in skilled trades, there may be additional factors to take into account.

Unpredictable Work

Skilled trades can be unpredictable, with job stability often depending on the time of year and demand for services in your specific industry. For example, HVAC technicians may have a steady stream of work during the summer and winter months, but experience a slowdown during the spring and fall. Similarly, construction workers may see a similar change in workload depending on the season.

Having a sufficient emergency fund can help bridge the gap during slower periods of work. While there is no set amount that will work for everyone, it’s important to evaluate your individual situation and create a savings goal that works for you and your particular skilled trade.

Equipment Costs

Being prepared financially in the event of equipment breakdowns, repairs, and replacement is also important for skilled trades workers. While many employers cover some or all of these costs, having your own emergency fund can help cover any expenses that fall outside of what your employer covers.

Additionally, if you own your own business in the skilled trades industry, an emergency fund can be even more critical. In the event that equipment breaks down, repairs are necessary, or you experience a slow period in business, the emergency fund can be a lifesaver.

Healthcare Costs

Healthcare costs are another area where those in the skilled trades may need to have a larger emergency fund. The nature of the job can lead to physical strain and a higher risk of injury. While workers’ compensation may cover some costs, there may be out-of-pocket expenses for treatments, physical therapy, and other medical needs.

Beyond injury-related expenses, healthcare costs can also include unexpected illnesses or conditions that require hospitalization or ongoing treatment. Again, having a sufficient emergency fund can help cover these unexpected expenses.

The Bottom Line

When it comes to saving for an emergency fund, the amount you need will depend on your individual situation. Factors like job stability, equipment costs, and healthcare expenses should all be taken into account when creating a savings goal.

While three to six months’ worth of living expenses is a common rule of thumb for emergency funds, those in the skilled trades industry may need to aim for a higher amount. By evaluating your individual financial situation and planning accordingly, you can ensure that you’re prepared for any unexpected financial emergencies that may come your way.

Photo of the Remarkables mountain range in Queenstown, New Zealand.
Photo of the Remarkables mountain range in Queenstown, New Zealand.

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> Inaccuracies with Bureau of Labor Statistics (BLS) data: Many of our blog posts will quote BLS data. SkilledTradeRescue.com has been able to identify that data quoted specifically for Skilled Trades can be as much as 50% LOW in many USA labor markets. For more information on these inaccuracies please visit the STR national labor survey page at the link below. On this page there is a video containing the latest information at the top of the page as well as other information. If you currently work in skilled trades, PLEASE consider participating in our national labor survey.

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