How much should I have in an emergency fund?

How much you should have in an emergency fund depends on your situation, including your regular expenses and the kinds of unexpected costs you’ve faced before. Some experts recommend saving three to six months of expenses. Others suggest working toward a specific dollar amount. Emergency savings can help you prepare for a job loss, illness, accident, car repair, natural disaster or other unexpected expenses. To estimate an amount that fits your situation, try the Regions emergency fund calculator.

Key takeaways

• The right emergency fund amount depends on your expenses and your situation.
• Some experts recommend saving three to six months of expenses, while others suggest a specific dollar goal.
• Regular deposits, even small ones, can help your emergency savings grow over time.

How many months of expenses should an emergency fund cover?

Some experts recommend that an emergency fund cover three to six months of expenses. There isn’t one right number for everyone, so think of that range as a starting point rather than a rule.

To see what that range could mean for you, start with the expenses you would still need to pay if your income stopped or an unexpected cost came up. Then compare that total with what you have saved today.

If three to six months feels out of reach right now, you can set a smaller first goal and keep building from there. According to the Consumer Financial Protection Bureau (CFPB), even a small amount of savings can provide some financial security.

What affects how much you need in an emergency fund?

A good emergency fund amount is one that fits your own expenses and circumstances. These factors can help you decide:

• Your regular expenses. The more you spend each month on bills and necessities, the more you may want to set aside.
• Unexpected costs you’ve had before. The CFPB suggests thinking about the most common unexpected expenses you’ve faced and how much they cost. This can help you set a goal.
• High-interest debt. Some people pay off high-interest debt before they start saving for an emergency fund. Others build some savings while paying down debt. Learn more in Is it better to save or pay off debt?

Only you can decide what’s best for your situation.

How to set your emergency fund goal

Determine what savings amount makes sense for you, then set a goal to get there. The Regions emergency fund calculator can help you estimate how much to set aside for emergencies.

Once you have a goal, these steps may help you reach it:

1. Start small. Even small deposits add up over time.
2. Make saving automatic. You can set up a direct deposit from your paycheck into a savings account or schedule an automatic transfer from your checking account to your savings account each month.
3. Save regularly. The key to building your emergency fund is making regular deposits.
4. Look for money to redirect. If you’re having trouble finding money to contribute, look for an existing expense you can cut.

For more ideas, see how to save money or follow a simple rainy-day savings roadmap.

Why create an emergency fund?

You can’t control everything that happens in your life. But you can prepare to pay for things that come out of the blue. An emergency fund lets you use savings to pay for unexpected expenses, so you may not need to rely on other, more costly forms of funding. For example:

• Credit card balances can grow. If you use a credit card for an emergency and can’t pay the balance each month, you may pay interest on what you owe.
• Investment and retirement withdrawals can cost you. Withdrawing money from these accounts may come with early withdrawal penalties and can reduce your long-term savings.
• Fees can add up. Emergency savings may help you keep up with existing payments when something unexpected happens. Late fees and overdraft charges can take a big chunk out of your hard-earned dollars.

Knowing you have money set aside may also give you peace of mind, so you can focus on the issue at hand. If you’re facing a surprise expense now, read what to do when facing unexpected expenses.

Where should I keep my emergency fund?

A savings account is one place to keep emergency savings separate from the money you use every day. As your balance grows, you can consider other options, like certificates of deposit (CDs) or money market accounts, depending on your need to access funds. Rates, terms and access differ by account, so review the details before you choose.

Regions online tools to help you save

Regions has budget calculators to help you manage your money throughout life’s stages. You can also compare savings accounts to choose an account for building your emergency fund.

To learn more about Regions savings accounts, visit the Regions branch nearest you or call 1-800-REGIONS (1-800-734-4667).