How much should I save monthly for emergencies?

Annamaria Lusardi at George Washington University finds that financial literacy and preparedness are uneven, and many households lack liquid savings to absorb shocks. The Consumer Financial Protection Bureau recommends building an emergency fund equal to three to six months of essential living expenses as a baseline. The Federal Reserve has repeatedly reported that a large share of adults would struggle to cover a modest unexpected expense, which underscores why a dedicated emergency reserve matters.

Recommended target and why
Three to six months is a general starting point because it covers common disruptions such as temporary job loss, car repairs, or moderate medical bills. The lower end is more appropriate for people with stable employment, dual incomes, and access to strong social safety nets. The higher end or a larger buffer is prudent for self-employed workers, households in regions with volatile labor markets, or people supporting dependents. Environmental and territorial factors matter: communities prone to climate events face foreseeable spikes in emergency needs, and areas with high cost of living require proportionally larger funds.

How to calculate your monthly savings
Start by listing essential monthly expenses: rent or mortgage, utilities, food, insurance, transportation, minimum debt payments, and necessary healthcare costs. Multiply that total by the number of months you want to cover. Decide how quickly you want to reach the goal. For example, if essentials are 3,000 per month and you choose a three-month target, the fund goal is 9,000. To reach that in a year you would save 750 each month. If you prefer a shorter horizon because you anticipate a job change, increase the monthly contribution accordingly.

Causes and consequences of under-saving
Insufficient emergency savings often results from low incomes, irregular work, cultural expectations that family will provide informal support, or lack of access to financial services. Consequences include reliance on high-cost credit, depleted retirement savings, or housing instability. At a societal level, communities with low collective savings are more vulnerable to economic shocks, which can slow recovery after regional disasters and increase demand on social services.

Practical choices and trustworthiness
Place emergency savings in safe, liquid accounts that earn some interest while remaining accessible. The Consumer Financial Protection Bureau advises keeping these funds separate from routine checking accounts to avoid accidental spending. Reevaluate your target when major life changes occur such as moving, childbirth, chronic illness, or changes in employment. For targeted guidance and tools, consult resources from reputable institutions such as the Consumer Financial Protection Bureau or research by experts like Annamaria Lusardi at George Washington University. These sources provide evidence-based frameworks to tailor an emergency saving plan to personal circumstances and local conditions.