4 reasons I keep $35,000 in my emergency fund instead of following typical expert advice (2024)

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• Experts recommend keeping at least three to six months of expenses on hand in an emergency fund, but I've chosen to keep $35,000 — a full year of expenses.
• I have a low risk tolerance and unpredictable income as a freelancer, so I feel safer knowing I can cover my expenses if my income drops.
• As a child of the Great Recession, I also know that economic security isn't always promised, so I'm providing it for myself.
• See Business Insider's picks for the best high-yield savings account »

An emergency fund is something that most personal finance experts recommend. In most cases, they recommend having between three and six months of expenses on hand.

I've chosen to keep $35,000 on hand for emergencies — a full year of expenses.

Why save a year's worth of expenses?

Whether we like it or not, money can have a big impact on our lives.

Indeed, the past few weeks have shown us that an emergency could be lurking just around the corner when you least expect it. With the current COVID-19 crisis in mind, the standard recommendation for three to six months of expenses on hand seems reasonable. However, the amount that you decide to keep on hand can, and should, vary based on your career and risk tolerance.

For example, let's say you have a relatively unstable career with a low risk tolerance. You'd probably want to have a large emergency fund. But if you have a rock-solid career with a high risk tolerance, then you might only feel the need for a few months' worth of expenses on hand. It truly comes down to personal preference based on your situation.

I decided to take my emergency savings to the extreme and have one year of expenses on hand.

I have a low risk tolerance

The thought of wondering how I would pay my bills if a dramatic life event happened is one that fills me with anxiety. Although I would likely be able to rally if a large unplanned expense popped into my life, it makes me uncomfortable to even think about this possibility. I simply feel more at ease and able to tackle life knowing that I have these savings ready to deploy at a moment's notice.

In order to fund my lifestyle for an entire year, I would need $35,000 in readily available money, so that's how much I keep on hand.

It is important to note that these funds are completely separate from my retirement savings and any investments in the stock market. These funds are stored in a high-yield savings account that could be accessed at any point in time.

Related: The best emergency loans »

Shifting career dynamics

Before I built my career as a freelancer, I had a regular 9-to-5 with a stable paycheck. Although I earn more as a freelancer, the dependability of my paycheck was difficult to give up. I wanted to make sure that I had a large amount of savings on hand in case my decision to shift careers didn't turn out as planned.

As a freelance writer, there are good months and bad months. My income is typically fairly steady, but there have been some dramatic ups and downs along the way.

Unfortunately, I am someone who thinks about the worst-case scenario. It is technically possible that my income streams could dry up overnight. Since I can't help but worry about that unlikely situation, it helps me sleep better to know that I would have a year to figure out what to do next. I have enough faith in myself that I'd be able to pivot to a new income stream within a year.

The flexibility of savings

As I've built my savings, I have been able to breathe more easily about making big life decisions. I have been able to reclaim more flexibility in my schedule and work towards a better work-life balance.

Before I had the security of an emergency fund, I would never turn down the opportunity to work overtime or pick up an extra assignment. Now, I can consider my mental health and other plans. With these savings, I know that I have some wiggle room built in if I need help making ends meet in a particular month.

An uncertain economic outlook

As a child of the Great Recession, I know that factors beyond your control can truly change your financial situation overnight.

I know that I cannot single-handedly prevent another crisis, so I've chosen to focus on what I can control. Since I can control the amount of savings I have on hand, I feel better prepared to weather any emergency that the global economy throws our way.