How much emergency savings should I have?

Most personal finance experts and U.S. consumer regulators recommend keeping a safety cushion equal to several months of essential living expenses. Consumer Financial Protection Bureau advises building an emergency fund large enough to cover at least three months of basic costs and expanding it toward six months or more when job loss or major expenses are plausible. Board of Governors of the Federal Reserve System research underscores why: a substantial share of adults report lacking ready cash to cover even modest unexpected expenses, increasing reliance on credit.

Recommended targets

A commonly cited baseline is three to six months of essential expenses, where essentials mean rent or mortgage payments, utilities, food, transportation, insurance, and minimum debt obligations. Suze Orman personal finance author and broadcaster has recommended an even larger cushion for greater job security, suggesting roughly eight months for households that prefer a conservative approach. Institutional guidance balances competing risks: smaller funds can absorb short-term disruptions, while larger reserves reduce the chance of high-cost borrowing when income is interrupted.

Factors to consider

The right size of an emergency fund depends on income stability, household composition, health risks, and local social supports. Households with irregular self-employment income typically need more liquidity than stable salaried workers. Families with dependents, chronic medical needs, or mortgages face higher fixed obligations and therefore should multiply their target. Geographic and cultural context matters: residents of regions with higher costs of living or frequent natural disasters may need larger funds to cover displacement, repairs, or higher replacement costs. Research from Pew Charitable Trusts shows that lower-income households and those lacking banking access are particularly vulnerable to small shocks, which can cascade into longer-term financial instability.

Consequences and practical steps

Without adequate savings, households commonly turn to high-interest credit cards, payday loans, or by selling assets, all of which can deepen financial strain. Board of Governors of the Federal Reserve System analysis connects inadequate liquid savings to greater difficulty meeting basic needs during economic shocks. To reduce that risk, keep emergency savings in highly liquid, low-risk places such as a dedicated savings account, a money market account, or other short-term instruments that preserve principal and allow quick access.

Begin with a modest, achievable goal and automate deposits to build momentum. Reassess targets after life events such as a new child, job change, move, or a diagnosis that affects income or expenses. Cultural practices and community supports can complement personal savings: extended family networks, cooperative insurance pools, or community credit unions may reduce the amount an individual needs to hold alone, but they should not replace a personal liquid buffer. Tailoring the size of an emergency fund to personal circumstances, supported by evidence-based guidance from regulators and research organizations, offers the best balance between preparedness and efficient use of resources.