Is Your Emergency Fund Big Enough?

It’s Murphy’s Law: anything that can go wrong, will go wrong. Now it might not be as bad as all that, but you never know when a crisis will hit out of the blue. And that’s why having an emergency fund is so important. Typical personal finance advice says to save approximately 3 to 6 month’s worth of expenses in an emergency fund to deal with life’s unexpected expenses. But how many people actually keep that much sitting around? Most people have some consumer debt, so if they’re focused on their finances at all, they’re typically saving up a minimal emergency fund (like $500-$1,000), and then spending the rest on paying down their bills. That seems reasonable, after all the interest you’re likely paying on your consumer debt usually far outweighs the measly 1% interest you’d be lucky to get on your savings (if you can even find 1%). But is your emergency fund big enough to save you? When it comes to emergency savings, size matters.

Is Your Emergency Fund Big Enough?

How Big Should Your Emergency Fund Be

A new study from JPMorgan Chase Institute shows that on average, U.S. households don’t have enough saved up to handle their extra spending and loss of income, especially those in the lower to middle income ranges. In fact, middle income earners on average are almost 38% short of how much money (in liquid assets) they need available to cover the unexpected for one month. Here’s a look across the income brackets at the average need versus what’s available from 2013:


Since these numbers cover only one month, you’ll need to multiply the average needed by three to six to truly be prepared for any long-term emergency situations. So now that you know what your emergency fund size should look like, how do you get it there?

How to Increase Your Emergency Fund Size

Take it one step at a time

I bet that number you just calculated looks pretty large right now. That can be intimidating and keep you from starting to save at all. Instead, break it down to a manageable goal, even $20 per week. Slow and steady wins the race and saving something is always better than saving nothing.

Cut back your expenses

To save money, you have two options: cut your expenses or make more money. This blog is full of ideas on how to save on your expenditures. Shop around for new insurance. Start meal planning, using a shopping list, and clipping coupons for your groceries. Save money when you go out for a meal or negotiate prices when shopping. Whatever ways you can trim your expenses, start putting that extra away towards your emergency fund.

Make more money

And of course the other option is to increase your income. You don’t have to get a raise at work (although that’s certainly one way to do it). You can selling unwanted items sitting around your house, and get rid of clutter at the same time! Or you can find a side hustle, like selling your crafts on Etsy, using your writing skills as a freelancer, getting a part-time job, organizing parties, walking dogs, driving for Uber, or whatever works best for you.

Automate your savings

When the money isn’t sitting in your checking account (or your pocket), you’re less likely to spend it. Set up a recurring transfer so that when you get paid, your emergency fund gets paid first.

Keep it only for emergencies

Once your savings starts to accumulate, it can be tempting to access your cash for things like a new car, a vacation, or a move to a new location, but limit your use to emergencies only. Make sure all the other categories of expenses are in your budget and are planned. Remember every time you draw down on your emergency savings, you risk not having enough for the next problem that comes along.

Put it into a savings account with interest

Credit unions and online banks tend to have the best interest rates, although right now those rates still aren’t very high. But every little bit helps, and if you can build on your savings without doing anything but watching it grow, take advantage.

And one more thing…have an emergency budget ready

While this doesn’t increase the size of your emergency fund, it does increase how long it will last. Go over your budget and decide what you could live without in a desperate situation. Cut all expenses back to your “bare bones” budget and keep that tucked away somewhere safe. When an emergency hits, like an extended illness or job loss, you’ll be ready to reduce your expenses right away and perhaps make that three month fund last five months.


I’ll admit, my emergency fund used to be larger because it has served its purpose in seeing me through several crisis situations. Over time, the amount has gradually declined and therefore it needs to be replenished. When this happens, it’s time to make emergency savings your number one priority, as problems can strike at any time.

Do you have an emergency fund? Do you think it’s big enough? What are you doing to increase it?

Image courtesy of cbenjasuwan at (with changes)


  1. Mel

    Terrific post! I’ve never seen that infographic before either – it made me feel a little better about my own emergency fund, although I’ve apparently underestimated exactly what 3-6 months would actually look like. My goal is to get it up to $10,000. I hustled pretty hard to get it up to $5,000 and decided from that point on, I can just keep adding about $100 a month until I hit $10,000, even though it will take a while.

  2. I find it so hard to accumulate 3-6 month’s worth of an emergency fund, when there’s so many other things to save / pay for! I’m afraid our emergency fund would only cover us for one month – but we do have house deposit savings fund that we could dip into, if we had to.

  3. Petrish @ Debt Free Martini

    I don’t believe that there is a one size fit all amount for an emergency fund and that each person needs to establish an amount that will cover what they need in a time of an emergency. For an example I live away overseas and my emergency has to be at least $4000 dollars in order to pick up and fly me and my child back to the states on the fly. That amount would also cover regular expenses over a period of about 3 months for me also, so I really believe it depends on the persons lifestyle.

    1. You make a very good point about emergency fund needs being different from person to person. Factors like your family size, diversity of income streams, whether you have passive income (and how passive it really is), income/job security, health, availability of help from family, where you live, whether you rent or own your home, can all affect how much you should have saved away. I think what we can learn from the research is that most Americans are underestimating how much they would actually need, and to be careful not to fall into that trap. Petrish, it sounds like you have given thought to your particular needs, and that’s the important thing.

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