How much months of savings should you really have?

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Hanna Horvath, CFP®

Hanna Horvath, CFP®


Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and managing editor for growth at Policygenius. She helps produce the Easy Money newsletter, and owns all growth initiatives for Easy Money. She recently passed her exam to become a CERTIFIED FINANCIAL PLANNER™ in November 2020.

Hanna's work has appeared in NBC News, Business Insider and Inc. Magazine. She is regularly quoted in top media outlets, including CNBC, Best Company and HerMoney. She has also appeared on the Money Moolala podcast and All's Fair podcast.

Prior to Policygenius, Hanna wrote for KNBC in Los Angeles and WNBC in New York. When she isn't writing, she's (often) running, (usually) cooking and (sometimes) doing photography.

Updated September 21, 2021|4 min read

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Financial emergencies range from life altering, like a house fire, to mundane, like a broken appliance. Last year, many workers lost their jobs, while others were confronted with medical debt. While you may have gotten through 2020 on solid financial footing, the next emergency could be right around the corner.

To prepare for these unplanned expenses, everyone should have an emergency savings fund that acts as a financial safety net. An emergency fund is savings set aside to help cover unexpected bills. Emergency funds can also help cover your regular expenses should you lose your job or have your income cut. The common rule of thumb was to save three to six months’ worth of expenses, but some experts now recommend having six to 12 months of savings on hand. 

There’s no one-size-fits-all emergency plan. How much you should save depends on your current financial picture, family situation and future goals. We asked 20 certified financial planners how many months of emergency savings you should have, and results were surprisingly split.

Q: How many months of emergency savings is best?

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Why some experts say 3 to 6 months of emergency savings:

Some experts think savers should stick to the rule of thumb, especially if putting money in your emergency fund takes away from investing goals.

“Everyone needs an emergency fund of three to six months of living expenses. Before paying off debts, make sure there's a rainy day fund to keep from going into more debt when something expensive and unexpected happens.” Douglas Garrison, certified financial planner at Investec Wealth Strategies

“I advise clients that a range of three to six months works well unless there are specific goals they are saving for which require more, like a down payment on a house or buying a car. If, however, a client is married and there is a second income or if the client's job security is perceived to be very high, the lower end of that spectrum is preferred. Since cash isn't yielding much these days, too much cash waters down the client's overall return.” Michael Simmons, certified financial planner at Transitions Wealth Management

Why some experts say 6 to 12 months of emergency savings:

These are unprecedented times, and if you’re able to put more towards emergency savings, some experts say you should.

“Before COVID-19, I recommended three to six months. Now, though, I think people need to be covered for longer periods. If there is an example of why people need emergency savings, COVID-19 is it! These funds need to be in a bank savings account — not invested in the security markets.” Sallie Thompson, certified financial planner

“Larger emergency funds could be appropriate for a homeowner, people with high-deductible health insurance plans, pet owners and people with variable income such as someone who earns a large amount of compensation from commissions.” Joseph Stemmle, certified financial planner at Ameriprise Financial

Why some experts believe in the 12-month emergency fund:

“I used to recommend keeping three to six months of expenses in savings. Then the financial crisis hit. Since then, I have recommended 12 months of expenses.” Thomas Rindahl, certified financial planner at TruWest Wealth Management Services

“Having an emergency fund or cash reserve established for you and your family can make or break your financial life. A financial emergency can be a speed bump, or it can be a financial tsunami if you are not prepared. An emergency fund can soften the blow and help you deal with life’s unexpected curveballs, like unemployment.” Jay Spector, certified financial planner at Barton Spector Wealth Strategies

How to build an emergency savings fund

To set your emergency savings goal, recalculate all essential monthly expenses — food, rent, bills, transportation and other necessities may change during a recession — and multiply by the number of months you want to save. Keep in mind the number is flexible and based on your financial needs. The key is to strive for enough to cover unexpected emergencies without neglecting other priorities. If you dipped into your savings account last year, prioritize building it back up.

Consumer spending is up as Americans start shelling out on travel, dining out, and other experiences. But just because you may be spending more doesn’t mean you should abandon your savings goals. Basic personal finance advice encourages you to save at least 20% of your paycheck each month. But it’s a good idea to aim higher, even when the economy is growing. 

There’s no one-size-fits-all savings plan. How much to save depends on your financial picture, family situation and future goals — but last year is a good reminder to have a savings stockpile on hand. Breaking down your goal into manageable steps will make building a year-long emergency fund less daunting. Figure out a schedule that works for you and commit to contributing the funds you’ve set aside for emergency savings until you reach your goal.

Consider small changes, like brewing coffee at home or skipping takeout, and adopt new habits, like cooking at home or doing your own repairs. Continue to monitor your savings plan and make adjustments as needed.