5 Key Signs Your Emergency Fund Is Too Small for the Trump Economy
Written by
Jordan Rosenfeld
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Molly Sullivan
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With sweeping tariffs at levels not seen in decades, consumers are seeing rising prices throughout their monthly budgets. Meanwhile, healthcare premiums and deductibles are climbing, housing and auto insurance costs are soaring and inflation remains above the Federal Reserve’s comfort zone. In this environment the traditional “three to six months” emergency fund rule simply may not cut it.
Here are five signs your emergency fund isn’t keeping up with President Donald Trump’s economy.
1. Your Living Costs Have Outpaced Your Savings
Inflation may have cooled slightly, but that doesn’t mean your expenses have gone down, according to Joseph M. Favorito, a CFP and managing partner of Landmark Wealth Management, LLC. Prices for essentials remain far higher than they were just a few years ago. If your emergency fund hasn’t grown alongside your monthly costs, it may no longer offer enough protection.
Andreas Jones, certified financial education instructor (CFEI) and founder of KindaFrugal.com, suggested “a baseline of four to six months of essential expenses for most households.” He warned that “the old three-month rule doesn’t stretch as far anymore because inflation has pushed up the cost of groceries, utilities and car insurance.” The margin for error is just smaller now.
2. You Couldn’t Cover a Big Expense Without Debt
Unexpected costs can drain a too-small fund in a single blow. If an emergency would push you to use credit cards or sell investments, your cushion isn’t big enough.
“The biggest surprise expenses I see today are car repairs and medical deductibles,” Jonas said. “Both have climbed steeply over the past decade and can wipe out savings in a single hit.”
Taylor Kovar, CFP, founder and CEO of 11 Financial, added that home and auto insurance premiums, bigger medical deductibles and increased costs for child care or caring for aging parents are also taking a toll on people’s budgets. “For anyone with variable income or contract work, it’s best to save even more since those income gaps can last longer than expected.”
One consequence of not having an adequate emergency fund is that you can be forced to sell assets at inopportune times, Favorito said, “such as liquidating a stock portfolio and realizing an unnecessary tax liability.”
3. You Have Unstable or Variable Income
“Income stability is also important,” Jonas said. He and the other experts say that while a six-month fund might work for salaried workers, freelancers and gig earners should aim higher.
“If your pay depends on commission, tips or shift work, your safety net should cover several slow months,” Jonas advised. Once savings fall below a month of expenses, your financial risk rises even faster, he warned, “because even a short gap pushes you toward high-interest credit.”
4. You’re Nearing Retirement Without Enough Liquidity
As you get older, it becomes harder to replace lost income, and health costs tend to climb. According to Chris Keane, SVP of direct lending at Newfi, “For someone close to retirement, the emergency fund target looks very different. I usually advise keeping nine to 15 months of expenses set aside,” Keane said. “[R]eplacing income after job loss is far tougher once you’re past your mid-fifties.”
Keane said you’ll know your fund is too small if you’re dipping into retirement accounts during market downturns to cover routine bills. “That speeds up depletion and increases risk just when stability matters most for you.”
5. You Haven’t Reassessed Your Savings in Years
If your emergency fund has remained static while your expenses, family size or responsibilities have changed, it’s probably not sufficient anymore. Experts agree that revisiting your cash reserves annually — especially during economic uncertainty — is key to staying protected.
“Holding too much in cash only becomes a concern when routine costs are secure and there’s no exposure to job loss,” Keane said. Beyond that, consider investing excess cash in low-volatility investments to preserve your purchasing power.
Kovar stressed that savings doesn’t have to be a huge chunk of your income either, pointing out that “small, steady contributions really do add up.”
If any of these signs sound familiar, it’s a good time to boost your emergency fund now, before rising costs or an unexpected setback leave you short when you need it most.
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