How much money do you need in an emergency fund?

with Bank closed, Stubborn inflationAnd capital market Uncertainty, it’s probably a good time to start beefing that up emergency fund — or open one if you haven’t already.

According to a recent survey by a financial advisory firm Edward Jones, nearly a third of Americans have less than $500 in emergency savings. And two in five expect their savings to last no more than a month.

“It’s not enough,” says Megan Dow, research analyst and certified financial planner at Edward Jones. How much, then, is enough for an emergency savings fund? In this article, we’ll break down exactly how much financial experts recommend.

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How much money do I need in an emergency fund?

Most financial professionals recommend that you save three to six months’ worth of expenses — at the very least.

This is just a general rule though. In reality, the amount you need to deposit in your emergency account depends on your specific living situation and financial situation.

“An emergency fund should be based on your specific situation,” says Lamar Braham, CEO and founder of the Noel Taylor Agency, a financial planning firm in North Myrtle Beach, South Carolina. “Start by making a budget and separate needs from wants. Then, you should set aside three months’ worth of cash to cover your needs, which will include housing, transportation, utilities, etc. After you’ve saved enough to meet the needs, the needs Consider adding additional funds to meet.”

You should also consider the potential risk factors in your life that could come with a sudden cost – or sudden loss – in the near future.

As Dow explains, “If you have a higher risk of unexpected expenses – for example, an old car that may need repairs, the risk of income loss is higher – such as if you’re in a single-income household or work in an industry with high job insecurity, or an emergency. Values ​​the convenience of being able to cope, you may want to save more.”

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How important is emergency funding right now?

You may want to consider the state of the broader economy when determining how much to put in your emergency fund. At the moment, for example, Chances of recession Bank closures still loom, and stock markets have been volatile in recent months. Given all of this, saving more than the typical three to six months can provide some extra peace of mind.

“It’s always a good idea to save more money during a recession and when the Federal Reserve continues to raise interest rates to calm inflation,” says Christine Petersmark, investment advisory representative at BridgeRiver Advisors in Bloomfield Hills, Michigan. “Life will continue to be more expensive than what we’ve seen in the past decade. Having a larger safety net can reduce unexpected financial burdens, while also reducing stress.”

In light of today’s “financial climate,” Brahms actually recommends that clients save for six to 12 months “just to be safe,” he says.

“With inflation affecting everyday life, rising interest rates, bank failures and an overall gloomy outlook on the economy, a safety-first posture is recommended,” Brahm said.

How to Build Your Emergency Fund Fast

If you haven’t yet saved up that three to 12 months of emergency cash, now might be a good time to open up High Yield Savings Account. rate on this account has been has been increasing in recent months and can help you Save funds quickly than traditional checking accounts.

You can also see Certificate of Depositwhich is Rising interest rates are also seen. They offer pre-established returns as long as you cash in the CD after its maturity date. You can get CDs that usually last from a few months to five years.

Braham recommends setting up automatic deposits into your savings account, if possible.

“Payroll deductions, bank drafts, and any other automated process that takes the human element out of the equation is key,” says Brahm. “The old rule, ‘If you can’t see the money, you don’t spend it,’ applies to an emergency fund.”

You can also make it a point to funnel any cool stuff you might get into your account — things like tax refunds or vacation bonuses. As Dow puts it, “even a relatively small amount can improve your financial stability.”

Explore your high-yield savings account options online or through the table below now and start growing your emergency fund.