Should Unmarried People Have a Larger Emergency Fund?

Tom Gilmour is a senior director of Planning Experience Integration for Northwestern Mutual.

When you’re flying solo financially, there’s a certain freedom in making your own financial decisions. You don’t have to clear a big purchase with a partner or argue over the thermostat setting. But that independence comes with some risk. If you get hit with a big medical bill or your employer reduces staff, there may not be a second income to help absorb the blow.

Ideally, you’ve built up an account for events like these. How much you should save up depends on a few factors and might be larger than expected. Let’s dig in.

Emergency fund basics

At its core, an emergency fund is a financial cushion designed to pay for immediate, non-negotiable expenses if you suddenly lose your income or have a big, unexpected bill. It isn’t an investment strategy meant to make you rich or a “fun fund.” Instead, it’s a risk management tool meant to keep you afloat during a rough patch.

Because you might need this money tomorrow, where to put an emergency fund matters. You want to be able to easily access it without strings attached, so a high-yield savings account or a money market account are often good choices. These options offer a better interest rate than a standard checking account, helping to protect your purchasing power from inflation while ensuring the money is there just in case a pipe in your home bursts. Generally, building this “sleep at night” fund should be a priority before you funnel significant cash into more risky assets.

Your Northwestern Mutual financial advisor can help recommend a safe spot for your fund. They can also help you find ways to devote some money toward this fund among other important goals like paying down student debt and saving toward retirement. Northwestern Mutual generally suggests setting aside enough savings to cover at least one month of your expenses before turning your attention to longer-term financial goals.

Why one income makes saving even more important

Dual-income households often rely on a partner’s salary or health benefits as a bridge during a job transition. As a single person, you might not be able to count on that.

And there are several more factors that make the “average emergency fund” a bit riskier for singles, such as:

• The proportion of fixed expenses: Rent, utilities and internet costs don’t get cut in half just because only one person lives there. These fixed expenses often consume a larger portion of a single person’s monthly budget, leaving less room to absorb unexpected costs or drops in income.
• No go-to backup: If you get sick or your car breaks down, you may be stuck paying for things like Uber rides or grocery deliveries unless a partner, roommate or family member can help out.
• Compounded financial anxiety: When you’re covering costs on your own, a $1,200 dental crown or $3,500 home repair can have a larger impact on your long-term net worth than it would for a couple. You may be stuck putting an expense on a high-interest credit card.

Recommended emergency fund size for singles

When determining how much to save for an emergency fund, six months’ worth of expenses is the standard goal. But that’s just a general figure. It’s important to keep in mind that your specific life circumstances should move the needle. For example, if you’re on your own financially and have unpredictable income, you may want to have more than six months’ expenses on hand.

Your financial advisor can help you pinpoint a number and help you get started. (The total can seem daunting, but it’s important to get started and work toward it.) Meanwhile, here are some things to think about.

• Salaried workers: For singles with a stable, salaried job, the standard six months of essential expenses may be enough. But increase the goal if you’re particularly worried about the economy or your job.
• If you have uneven income: Freelancers, business owners and gig workers, we’re looking at you—along with salespeople working mainly on commission. Aim for six to 12 months because you need a larger buffer to smooth out the “lean” months.
• Single parents and solo providers: You should also aim for six to 12 months. Dependents increase your “floor” for monthly expenses. And you aren’t just saving for your own survival: You’re saving to ensure your child’s standard of living stays fairly constant regardless of your employment status.

Beyond the cash cushion

While cash is king in a crisis, it’s only one part of a sturdy financial situation. People relying on a single income need to protect their income stream. Short-term and long-term disability insurance can be a lifesaver, replacing a portion of your income if an illness or injury prevents you from working.

And because you depend on one income, you might find you have a lower willingness to take on risk, which is known as your risk tolerance. You can still seek growth, but your investment strategy should likely emphasize diversified funds to avoid the “all eggs in one basket” trap.

Ultimately, the “right” amount for your emergency fund is a balance between math and mindset. Even if a large emergency fund feels excessive to some of your friends and family, you may feel confident knowing it’s there for you. Turn to your Northwestern Mutual financial advisor to help you run the numbers and set your goal. Your advisor can also ask deep questions and get to know what really matters to you. That way, they can be your financial co-pilot through life’s twists and turns.

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