Guide to Emergency Fund | Chase (2024)

FAQs

Is a $5,000 emergency fund enough? ›

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.

Starter emergency fund: If you have consumer debt, you need a starter emergency fund of $1,000. This might not seem like a lot, but it's just a temporary buffer while you pay off that debt. Fully funded emergency fund: Once that debt's gone, you need a fully funded emergency fund of 3–6 months of expenses.

Income shocks tend to be more expensive and last longer than spending shocks. They also tend to happen less frequently. To prepare for income shocks, many experts suggest keeping enough money in your emergency fund to cover 3 to 6 months' worth of living expenses.

The long answer: The right amount for you depends on your financial circ*mstances, but a good rule of thumb is to have enough to cover three to six months' worth of living expenses. (You might need more if you freelance or work seasonally, for example, or if your job would be hard to replace.)

How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.

Your emergency fund should be set up to cover at least three full months of essential bills. If your monthly expenses are high, you may need to save more than $20,000.

How Much You Should Have in Your Emergency Savings. Here's a Dave Ramsey principle we agree with: If you make less than $20,000 per year, aim to have at least $500 in emergency savings. If you make more than $20,000, then aim for at least $1,000.

Only 44% of U.S. adults would pay an emergency expense of $1,000 or more from their savings, as of December 2023 polling.

The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

What is a good starter amount for an emergency fund? ›

Start by saving $1,000, then aim to save 3 to 6 months' worth of essential expenses by funding your emergency savings, as you would for a bill. Try to save in an account that pays some interest but preserves liquidity.

Is a 1-year emergency fund too much? If your risks are high or your comfort with risk is low, you may benefit from saving more than six months of expenses in your emergency fund. Going above six months can further increase your ability to weather emergencies.

How much should you have in your emergency fund? The golden rule is to squirrel away at least three to six months of your basic living expenses for an emergency. That way, should a major life-shifting event set you back financially, such as a job loss, you'll have enough to cover your bills.

Once you have this amount in your emergency savings account, you can focus on growing it to your personal savings target while also tackling other goals. Those general saving targets are often called the “3-6-9 rule”: savings of 3, 6, or 9 months of take-home pay.

Safety Net Calculator

PNC recommends that you consider keeping at least 3-6 months of your essential living expenses in an emergency fund to cover unexpected expenses, or loss or reduction of income. Talk with your banker to discuss ways to build and maintain your safety net.

Start by saving $1,000, then aim to save 3 to 6 months' worth of essential expenses by funding your emergency savings, as you would for a bill. Try to save in an account that pays some interest but preserves liquidity. As a last resort, credit could be used to cover an emergency, ideally with a low interest rate.

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 can I double $5000 dollars? One way to potentially double $5,000 is by investing it in a 401(k) account, especially if your employer matches your contributions. For example, if you invest $5,000 and your employer offers to fully match at 100%, you could start with a total of $10,000 in your account.

According to the Fed, over 40% of Americans said they wouldn't be able to cover a $1,000 emergency using only their current savings. With $5,000 in the bank, you've already made substantial progress compared to many others. Persichitte said $5,000 is a good start, but not the finish line on a savings account.