These are bleak scenarios that no one wants to imagine happening to themselves, but will you be financially prepared if it ever did? If not, then now is the time to start building your emergency fund.
An emergency fund or rainy day fund is money you set aside to prepare for unforeseen expenses or emergencies. This is money you can use when you need money desperately.
While the 3 to 6-month recommendation is a good rule of thumb, consider it a minimum baseline and do your assessment to determine how much money you may need in an emergency.
The more dependents you have, the more money you would need in the case of an emergency. You can set a goal of a fixed amount per member of your household or simply choose to save a percentage of your salary.
Your savings goal will need to be different if you have college tuition to pay for versus if you have a newborn child. A similar consideration is if you have elderly parents with medical expenses.