How much money do you need in your emergency fund? Experts do the math - so you don’t have to
More than half of Americans don’t have enough money squirreled away to cover their essentials for three months
Do you have an emergency fund?
This chunk of savings is what you want to have squirreled away to cover essential monthly expenses in case your finances are impacted by an unforeseen event, such as losing your job or an illness. These funds can also help cover unwelcome surprises, like car repairs.
If you don’t have an emergency fund, then you’re in the majority. Only 48 percent of Americans say they have emergency funds to cover three months of expenses, according to a 2025 Pew Research Center survey.
Nearly 60 percent of Americans also say they can’t afford a $1,000 emergency expense - and 25 percent would have to use a credit card, according to a 2025 Bankrate report.
Building an emergency fund may seem daunting but it’s possible with some planning and budgeting, experts say. The Independent spoke to two financial experts who walked through how to calculate what you need in an emergency fund — and how to start saving.
Why are emergency funds important?
These funds are your life raft when life throws a curveball. But they also provide “peace of mind,” according to Dr. Ray Charles “Chuck” Howard, an associate professor of business administration, at the University of Virginia Darden School of Business.
“You will be happier and more relaxed knowing that you have some money in the bank to fall back on if and when you need it,” Howard told The Independent.
How much money do I need?
The amount of money will vary, based on your goals and monthly expenses.
Experts typically recommend saving enough funds to cover three to six months of essential expenses, according to Dr. Scott Wolla, an economic education officer with the Federal Reserve Bank of St. Louis.
To start, he suggests tracking all of your essential and non-essential spending for one month. “Don’t forget the little things—coffee, snacks, streaming subscriptions, and lunch out with friends,” Wolla wrote to The Independent.
To calculate the minimum for a three-month emergency fund, take your total, essential monthly expenses and multiply by three, according to Wolla’s step-by-step guide. Essential expenses might include rent, groceries, medications, phone, utilities and insurance. For example, if your monthly essentials are $2,000, you should save $6,000 for a three-month emergency fund.
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If you use a debit or credit card for most of your spending, Wolla suggests downloading the latest bank statement in a spreadsheet format to help track costs. Don’t forget to account for any additional spending using cash or payment apps that might not be reflected in the statement.
The size of an emergency fund is also a “personal decision,” and depends on what stage of life you’re in, Howard said. For example, young people who can easily start a new job or take on gig work may need less of a buffer than older people who could have a harder time pivoting into new roles, he explained.
Howard also suggests tracking expenses over multiple months to get a better idea of your average spending.
“The reason why I suggest that is because a lot of advice offered by quote-unquote financial experts assumes that people have perfect self-control, no impulsivity, and ultimately that we're all able to make perfectly rational decisions 100 percent of the time. And we know that’s simply not the case,” Howard said.
“Nobody, literally nobody, is perfect all of the time,” he added. “So rather than get into the weeds about should I really be spending $7 on a latte this morning, just understand what your total monthly needs are in terms of your overall spending, and then use that as the target in terms of setting your emergency buffer.”
Where do I begin?
Once you have a handle on your monthly spending, it’s time to start building a fund. While this may seem daunting, start small, Wolla recommended. He suggested a target of $400.
“Once you have $400 set aside in a savings account, start on the next $400, until you get to your goal of three months of living expenses,” Wolla wrote. “Once you’re at three months, work toward six months.”
Having a budget can help, even if you don’t follow it perfectly every month, Howard explained. Money saved through budgeting can then funnel into the emergency fund.
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