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What's the right emergency fund amount?

How much should you have saved? Figure out your target number.

Look at what you spend

Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months' worth of living expenses.

What does that look like?

Start by estimating your costs for critical expenses, such as:

  • Housing.
  • Food.
  • Health care (including insurance).
  • Utilities.
  • Transportation.
  • Personal expenses.
  • Debt.

You don't need to include expenses for anything you'd cut from your budget in the event of a job loss or major catastrophe. For example:

  • Entertainment.
  • Dining out.
  • Nonessential shopping.
  • Vacations.
  • Savings for a second home, college, or other goals.

Decide if you need to save more

Putting aside 3 to 6 months' worth of expenses is a good rule of thumb, but sometimes it's not enough.

If you're able, you might want to think about expanding your emergency savings.

Here are some scenarios where having more in your savings could benefit you:

  • During a recession (when unemployment rates are higher and the length of unemployment is often longer).
  • If you're in a high-risk industry where layoffs are common.
  • If your income isn't steady.
  • If you're retired (and most of your money is in more-volatile stock and bond investments).

Something is better than nothing

Don't think you can save enough? Don't panic. You can build up to it by stashing away smaller amounts on a regular basis, like every week or every paycheck. If you keep it up, over time you'll eventually meet your goal.

The important thing is that you've started saving something.

For instance, let's say you set aside $25 a week in an emergency fund. At the end of 2 years, you could have $2,600 saved. Increase that amount to $50 a week and your savings could grow to $5,200. Make it $75 a week and you'll see an even larger amount saved—$7,800.

You can build your savings a little at a time over 2 years

Bar chart showing the positive impact saving $25, $50, or $75 per week can have on your final balance.

This hypothetical illustration doesn't account for inflation.

Where should you keep your emergency savings?

You know roughly how much you need to save for emergencies. But where should you keep it?

Start your emergency fund

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