My Spouse and I Both Work. Do We Really Need a 3-Month Emergency Fund?

It's still a good idea to have enough savings to cover three months' worth of bills.

Between the unemployment crisis of 2020 and rampant inflation, the events of the past three years have taught us all -- in some cases, the hard way -- how important it is to have a solid emergency fund. A recent SecureSave survey found that 67% of U.S. adults don't have the money to cover a $400 emergency. But if you're in a similar boat, it means you're likely to end up with costly debt -- most likely of the credit card variety -- if you were to lose your job and the paycheck that covers your bills.

In fact, it's for this reason that people are advised to have enough money in a savings account to pay for three months of bills. But does that rule apply when you're part of a dual-income household? The answer is, absolutely. Here's why.

It's a matter of being able to pay your bills

When you're single, the idea of having to save enough to cover three months of bills might make sense. After all, it can easily take three months to find a new job after losing one. So if you don't have at least that much cash in the bank, you might run into problems with debt fairly quickly.

But what if you're married and are part of a dual-income household? In that situation, you might assume you don't need to save enough to cover three months of bills, because what are the odds of you and your spouse losing your jobs at the same time? In some cases, the odds might be low. But that doesn't make them zero.

First of all, let's say you and your spouse both work in the same industry, and that industry takes a notable hit -- like the way the hospitality industry got hammered in 2020, when the COVID-19 pandemic shut everything down. In that case, it's more than conceivable that you and a spouse might lose your jobs at or around the same time, even if you work for different companies.

But even if you and your spouse work in completely different industries, the reality is that all it might take is a general economic downturn for layoffs to hit both of you simultaneously. And you can't assume that won't happen, even if it's not the most likely scenario.

That's why having that three-month emergency fund is crucial. Let's say you spend $5,000 a month on essentials and manage to save $15,000. If only one of you loses their job, and it takes three months to find another, it means you probably won't end up depleting your savings completely to cope with that situation. But in case you both lose your jobs at overlapping times, it's important to have that much money tucked away in the bank.

Won't unemployment benefits come to the rescue?

If you and your spouse are salaried workers and you lose your jobs through no fault of your own, you may be entitled to unemployment benefits. But depending on what you're earning, those benefits may not come close to replacing your missing paychecks in full.

Going back to our example, let's say you spend $5,000 on bills each month, and you each contribute $2,500 toward that total. If you were to both lose your jobs, you might each be entitled to $1,200 a month from unemployment. That's apt to help. But it won't come close to replacing your missing wages completely.

Now, you could argue that if you're eligible for unemployment, you don't really need a three-month emergency fund, since those benefits can pay for some of your expenses. But remember, it could take you more than three months to find a new job. So you're really better off sticking to that three-month guidance, regardless of how many paychecks flow into your household.

In fact, you should know that three months' worth of living expenses is really the minimum emergency fund you should aim for. So if you're able to save beyond that threshold, it could make the loss of a job much easier to manage -- whether it's just one of you who's been laid off or both.