Emergency Fund Calculator: How Much Should I Have? - NerdWallet (2024)

FAQs

Is $20,000 too much for an emergency fund? ›

Is $20,000 enough for an emergency fund? A savings account with $20,000 is a good starting point for creating a substantial emergency fund. This will help you financially should an unexpected situation arise. However, if you face an extreme situation, $20,000 may only cover limited expenses.

For many people, $5,000 would be inadequate to cover several months' expenses in the event of job loss or an expensive emergency. If that is the case for you, $5,000 would not be considered an overfunded account.

When asked how much money they'd need to save for a financial emergency to avoid additional stress, 40% would feel comfortable having a modest amount — below $2,500 — set aside. 21% say they'd need at least $10,000 saved to feel secure.

How much should you save? While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.

For your longer-term goal of an emergency fund that will cover income shocks, aim to save $15,000 to $30,000 total.

Generally, your emergency fund should have somewhere between 3 and 6 months of living expenses.

Key Takeaways. More than one in four Americans (28%) have savings below $1,000. This is the case for 32% of Gen Zers, followed by Millennials at 31%, Gen X at 27% and Baby Boomers at 20%.

Conventional wisdom tells us to plan for the unplanned by socking away enough to cover 3 – 6 months of expenses. Yet Americans have accumulated a median emergency savings of just $600.

If you're going to need $100,000 or more in the near future, then it's fine to have that much money in your savings account. There's one situation, in particular, where people often need this much or more in savings: when they're planning to buy a home.

Common personal finance advice recommends keeping three months of expenses in a savings account in case of a job loss or other emergency, and Bankrate's data shows most people agree with that. The vast majority (89 percent) of U.S. adults say they would need at least three months of expenses saved to feel comfortable.

What is too big of an emergency fund? ›

Your emergency fund could be too big if it exceeds three to six months' worth of expenses. That said, everyone has a different financial picture. Some people keep up to a year's worth of savings in an emergency fund, while others might find that sticking to closer to three months frees them up to pursue other goals.

Standard advice suggests saving three to six months' worth of expenses as your emergency fund to prepare for any potential drop or loss of income. If you have $3,000 of expenses made up of rent or mortgage and food, for example, then you would save between $9,000 and $15,000 in your emergency account.

Meanwhile, you might have a fairly large savings balance to the tune of $20,000. That's definitely a lot of money. And in some cases, that might constitute a really robust emergency fund. But in some situations, a $20,000 emergency fund might also leave you short.

Your emergency fund could be too big if it exceeds three to six months' worth of expenses. That said, everyone has a different financial picture. Some people keep up to a year's worth of savings in an emergency fund, while others might find that sticking to closer to three months frees them up to pursue other goals.

Depositing $20,000 in a savings account is wise when you have a plan for the money, such as a near-term expense or rainy day fund. For long-term goals, like retirement, you might be better served by opening a brokerage account or certificate of deposit (CD).

People in stable jobs are recommended to put away 3-6 months' salary into their emergency fund, whereas people with lower job security are recommended to save 6-12 months' salary. A stable income ensures a consistent and bigger emergency fund. The number of earning members in the family also matters.