44% of People Who Experienced a Financial Setback in 2022 Got a Bailout. Here's What It Was

Believe it or not, you can arrange for a similar bailout yourself.

It's more than fair to say that 2022 was a tough year for a lot of people. From the start of the year though today, inflation has been rampant. And that's caused a lot of people to experience setbacks. Those may have run the gamut from racking up credit card debt to having to hit pause on IRA or 401(k) plan contributions. 

Meanwhile, a recent Fidelity study reveals that 44% of people who experienced a financial setback over the past year had to dip into their emergency funds to get through it. But it's also a very good thing that those people had money in savings to tap when they needed to. So if you're lacking in the emergency savings department, consider this your firm but friendly wakeup call to amass some cash reserves before your financial situation takes a turn for the worse. 

The protection you need

Maybe you had a rough go of 2022. Or maybe you made it through the year just fine but are worried about 2023 given all of the recent recession warnings.

You should know that the best way you can gear up for a financial crisis -- whether a national one or a personal one -- is to have money in savings you can access in a pinch. If you don't have an emergency fund, or a complete one, make building that safety net your top priority in 2023.

How much money should you set aside for emergencies? It largely depends on your situation.

Some experts will tell you that you're fine to sock away enough cash to cover three to six months' worth of essential bills. Others will tell you that you need more like nine to 12 months' worth. 

To see which end of that range you should aim for, think about your life. If you're single and have only yourself to worry about, then you may be okay to sock away three months' worth of expenses in the bank and call it a day. But if you're married with two kids, and your spouse doesn't work, then you may want to aim higher. 

You might also consider boosting your personal cash reserves in case a recession strikes in 2023 and results in a lost job or reduced hours. Remember, even if you're able to collect unemployment benefits due to losing a job through no fault of your own, they'll only replace a portion of your missing paycheck. So the more you're able to boost your savings, the better.

Don't leave yourself vulnerable

You never know when you might experience a financial setback. But if you want a way to bail yourself out, then it pays to pump money into your savings account so it's there for you when you need it. 

And if you're not sure how much cash to sock away, err on the side of saving more. You're better off slightly overfunding your savings and having extra protection than doing the opposite and falling short when a financial emergency strikes.