How Long Can You Go Without Pay?

Whether it’s due to a government shutdown, natural disaster, or illness, many of us will go without pay at some time during our lives. If you were to stop receiving a check today, how long can you go without pay?

Over the past year, entire towns have been destroyed by wildfires and hurricanes. Each day, people become sick or injured and suddenly unable to work. I see this all the time in my profession. Currently, we’re in the middle of the longest government shutdown in US history. There are 800,000 federal employees who are going unpaid. Some are on furlough while most are on the job, but without pay. Chances are that all employees will receive retroactive pay after the shutdown ends. However, this is the longest shutdown in history and for the first time active duty members of the US Coast Guard are not getting paid, so you can’t always go by history.

Last week I was having dinner with some friends who were also government employees (yes, it was a pretty wild party). The conversation turned to the government shutdown and one of my friends asked “How much money do you need to keep in cash?”

Photo by Jonathan Saavedra on Unsplash

How Much Do You Need in Cash?

Good question. Some people say 3-6 months, or 6-8 months, or  even 12 months worth of expenses. Others may argue the importance of considering the average length of unemployment at the time.

One thing on which most people do agree is that you may need more than other people, depending on your situation. Here are some things to consider:


Are you the sole earner for your household?

How many dependents do you have?

How much are your monthly expenses?

How good is your health?

How secure is your job?

For example

I am the sole earner for my family. In addition to myself, I have four other people reliant on my paycheck. While I do have a mortgage, I have no other debt. I keep as few monthly bills as possible. My health is good and my job is relatively stable. However, I can be asked to work without pay.

Given my situation, I like to keep a year’s worth of emergency savings.

How much you need depends on how much you spend

Notice that all answers include some form of “worth of expenses.” If you have no expenses, then in theory you do not need any money in savings.

If you have $2,000 in basic monthly expenses, then you would need $12,000 in savings to cover six months of expenses and $24,000 to cover a year’s worth of expenses.

But if you have $5,000 in basic monthly expenses, then you would need $30,000 in savings to cover six months of expenses and a whopping $60,000 to cover a year’s worth of expenses.

This is one reason why keeping your monthly expenses as low as possible is so important.

for example

Should the Jones family pay off my largest monthly expense (the mortgage), basic monthly expenses could be kept relatively low in the event of an emergency:

Example of Low Monthly Expenses with No Debt
Housing (tax, insurance, HOA) $450
Food $400
Water $30
Electricity $150
Cell Service* $70
Internet* $0
Gasoline & Car Insurance $150
Car payment $0
Kids’ Activities* $0
Student Loans or Other debt $0

Total monthly expenses with no debt                                           $1,250

*If you are not under contract for these services, you can cancel them without penalty.

In this example, with monthly expenses of $1,250 this family would need $15,000 to have enough for one year’s expenses.

Have A Plan for Months Without Pay

Three out of four Americans are living paycheck to paycheck. And not just low-income households. Among those making $100,000 or more, 10% are living paycheck to paycheck. This is scary!

Whether your employer shuts down, you become sick or injured or pregnant, there is some sort of crisis, or you are not able to work for any reason at all, there may be a time when you are faced with going without pay. It’s important to have a plan for what you can do. Here’s my plan:

1. Keep your expenses low

Remember that dinner I had with friends a few days ago when someone asked about how much cash one should have? One friend shared that she has a $500 vehicle payment. Another friend said she had similar car payment. With large monthly expenses such this, it’s going to be challenging to keep your monthly expenses down.

To do this, lower all your monthly bills, pay off debt, avoid contracts (e.g., cell phone plans), pay in full and avoid monthly payment plans (even if the interest is 0%, monthly payments are still an added stress on your monthly expenses).

2. Have access to money to pay for basic necessities

By money I mean liquid money. This can be in the form of dollar bills or in a savings or money market account.

There are many benefits to keeping your savings liquid. Property takes time to sell. Investments may be sold at a loss. Retirement accounts if touched early can result in penalties and fees. Credit may not be available (e.g., identity theft, or tightening lending practices as we saw during the Great Recession).

3. Create multiple sources of income

If you stop receiving your primary income, any side sources of money you earn can be a huge help. Why wait for a crisis to start having multiple streams of income? Think of what you can do now to earn more money: anything from tutoring to creating passive sources of income.

Final Thoughts

As the sole earner for my family of 5, I am terrified at the idea of losing my income. That is one of the reasons I am so passionate about being debt-free and having minimal expenses.

Photo by rawpixel on Unsplash

To help protect myself should I become unable to work, my plan is to reduce my expenses to as low as possible, 2) save enough for one year’s worth of basic living expenses, and 3) work to develop additional streams of income.



If you stopped receiving a check today, how long could you go without pay?

4 thoughts on “How Long Can You Go Without Pay?”

  1. Right now as a slightly early retired guy with no mortgage and no debt I have about ten years of expenses in cash. But the majority of my investments are in stock, bonds, real estate and alternatives. I have no need to ever be paid again, but I work some just for fun and to keep my withdrawal rate at zero.

    1. Ten years of expenses saved and no mortgage?! I love that you work for fun and try to keep your withdrawal rate at zero. Stories like yours are so inspiring. Thanks Steveark!

  2. I think it also depends on your risk tolerance as well. We’re working to build up our cash reserves to be able to handle 3 months of our typical expenses. Although in a pinch we could and would reduce those expenses. For many, 3 months isn’t enough for a security blanket.

    1. Hi Stephen! Great points. I have low risk tolerance. No matter what your risk tolerance, it’s always good to have a cash reserve. It’s a question of how much is enough security for you.

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