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If you happen to lose your job, having an emergency fund can provide crucial financial support while you seek new employment. However, be mindful of some extra costs that arise when you lose a job. Make sure to plan for these expenses when preparing your savings.
Many experts recommend saving at least several months' worth of living expenses for emergencies. However, as the Motley Fool highlights, it's easy to underestimate how much you'll truly need during such situations.
For instance, if your employer covers your insurance premium, remember to budget for the additional cost of securing your own plan if you lose that benefit. The Motley Fool notes that the average health insurance premium for single coverage in 2015 was $521 per month. Your employer might also offer other benefits, like transit reimbursements.
Additionally, the Motley Fool emphasizes that your communication costs—such as cell phone and Internet service—could increase when you're out of work. You might require more phone minutes for interviews, or perhaps a better data plan for your home Internet service.
These are just a few examples, and there are many more available at the link below. Generally, though, you should consider what benefits you would lose and the extra costs you might face from staying at home.
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