Recently the job hunters of the world breathed a sigh of relief: On July 22, 2010, President Obama signed a bill restoring unemployment benefits to over 2.5 million Americans who have been jobless for more than 26 weeks, and it couldn't have come at a better time.
The national unemployment level has dropped slightly as the economy tries to pull itself out of recession, but the situation isn't moving fast enough for many families. While this reprieve comes at an opportune time for jobless parents, many of whom stopped receiving checks after June 2 when the first extension expired, the challenge of finding work in our struggling economy remains.
Parents caught in these unfortunate situations are having trouble finding work--even part-time jobs are scarce in many areas of the country. They've dipped into their savings (or used it up entirely), cashed in retirement accounts and moved to make ends meet. One hardworking father spent 36 years employed before being laid off; now, he's been out of work for 18 months and drained his savings to pay for health care coverage for his 13-year-old daughter who has diabetes. His older daughter is about to head off to college, but he doesn't know how he and his wife will cover tuition.
The stories of the aftermath of the recession are everywhere. And while most families can't prepare for 18 months (or more) of unemployment, it is possible to build an emergency fund that will protect your family, pay for your rent or mortgage, and also cover what's probably your second-highest monthly expense: child care. It's clear that having a savings plan in place is critical to surviving the longest recession since the Great Depression.
Experts differ on how much you should save (and the right answer is really whatever you're most comfortable with), but the general consensus is that families should have anywhere from $1,000 to $5,000 stashed into a savings account. Generally, families should aim to put away at least three to six months of living expenses. The Wall Street Journal's Complete Personal Finance Guidebook says a minimum of three months' salary is a good starting point and even suggests keeping several hundred dollars in cash stashed in your home (keep it in a safe, not under a mattress!).
The unemployment numbers are staggering; close to three million Americans face joblessness by the end of July. With almost 10 percent of the country unemployed (26% in some states), the benefits extension means food on the table for a few more weeks. Rent for another month. Maybe a few dollars to stash away for the emergency fund, if they're lucky. This extension of benefits has given struggling families some breathing room -- perhaps just enough breathing room to focus on what's really important: caring and providing for your family in tough times.