Time should be spend determining what a rainy-day may entail. Bottom line up front; $10,000 to $150,000 or more depending upon your normal income, expenses, and other potential financial obligations.
For some with very secure (think government) employment the rainy day may be much less than someone with different employment. Certainly, some amount of unemployment expenses should be part of a rainy-day fund. Think six months after tax, after 401k contributions, income.
An unexpected expense could also be a new large home appliance. Think $2,000-$5,000.
One, or a family, may need to travel and stay away from home for extended time to care for relatives or attend funerals. Think hotel, air, car rental costs of $2,000 to $10,000.
Another expense could be pet related. Think cancer treatments for Fido. We don’t like to think about these, but we should plan for them. $2,000.
I’ve added my “car” fund to my rainy-day fund. If I have major car repair work, I use money from this fund. When it comes time to replace the car, I have the ability to pay cash for the new replacement. Whether I do pay cash or not, is not the question. I have the ability to do so if appropriate. Think $5,000 to $50,000.
Do you have rental property? Add another couple of months vacancies or household repairs if you don’t carry proper insurance or otherwise self-insure. Think $2,500 to $15,000.
Because the rainy-day funds are kept separate from my retirement or other long-term goal investments, I’m more likely to keep it away from the volatility of markets and available when needed to spend on the rainy-day. It is unlikely that all of these unexpected events are likely to happen simultaneously, the grand total isn’t required immediately. However, it is best to establish a habit of adding to the rainy-day fund with every pay check or commission bonus.