Know how much you need in an emergency fund

Saving for unplanned expenses can give you peace of mind, even if an emergency never happens. The amount you need in emergency savings varies on your available resources and the severity of the emergency. Research shows households with emergency savings below $500 are more prone to worry, loss of sleep and other ill effects.

To begin thinking about how much you need in your emergency fund:

• Set aside a certain portion of each paycheck to build your emergency fund toward a balance of at least $500.
• Once you have $500 saved, revise your goal to have enough money to cover at least one month of your financial obligations.
• Ultimately, aim for a fund with enough savings to cover at least three to six months’ worth of basic living expenses. Of course, saving beyond this guideline is ideal, especially if your job is not secure.

Use the Emergency Fund Worksheet Download Emergency Fund Worksheet to tally your basic living expenses and estimate how much you need in an emergency fund. Then customize what you need to set aside monthly with the How Much Do I Need for Emergencies calculator. Set reasonable saving goals and build on common saving strategies to make it happen.

 

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