Emergency Funds: How Much to Save and Where to Keep It

What’s an emergency fund—and why should you have one?

How much should you save in your emergency fund?

While everyone’s financial situation and expenses are different, a common rule of thumb is to save three to six months’ worth of living expenses. If you have a steady income and few monthly obligations, you might feel comfortable on the lower end of that range. One the other hand, if you’re self-employed, supporting a family or managing irregular income, you may want to put more in your emergency fund.

Remember, the most important thing is to just get started.

Here’s how to calculate how much you should have in your emergency fund:

• Start by adding up your essential monthly expenses like housing, utilities, groceries, transportation and insurance.
• Next, multiply that by the number of months you’d like to cover.
• Try to anticipate any expenses that you can’t plan for, like potential car or home repairs.
• Once all your expenses are laid out, you should have a relatively clear savings goal. If that number feels out of reach, aim for a smaller goal.
• Start with a monthly contribution that you’re comfortable with and increase it from there as you can.

Our emergency fund calculator can also help you estimate how much you may want to save and how your balance could grow over time. By entering your initial deposit, interest rate and monthly/annual contributions, you can visualize your progress and see how your emergency fund can add up.

Consistency matters more than speed. Even a small amount each month builds momentum over time. The key is to start somewhere and make saving a habit.

When you’re estimating how much to include in your emergency fund, think about the common essential expenses you’d need to cover if your income stopped for a few months:

• Housing: Rent or mortgage payments, property taxes, utilities, repairs and insurance.
• Food and essentials: Groceries, household supplies and basic personal care.
• Transportation: Car payments, gas, insurance and maintenance—or public transit costs.
• Healthcare: Insurance premiums, prescriptions and out-of-pocket medical costs.
• Debt payments: Minimum payments on credit cards, student loans or other obligations.
• Dependents: Kids, pets or other forms of dependents and their associated monthly expenses.
• Unique monthly commitments: Any expense or anticipated cost unique to your situation.

Expenses to consider when planning your emergency account

Your emergency fund should be somewhere safe and accessible—not simply a hidden box of cash in your home. High-yield savings or money market accounts can be a great fit; you can get to your money when you need it and still earn interest when you don’t.

While putting it in your checking account may seem convenient, mixing your emergency fund with your regular transactions can also lead to accidentally dipping into it. Keeping your emergency fund in a separate account makes it less tempting to use for non-emergencies.

Tying your emergency fund up in long-term investments or certificates of deposit (CDs) isn’t recommended either since early withdrawals can be subject to penalties or delays. Liquidity is the focus when it comes to an emergency fund, since the primary purpose of this account will be to have money for the unexpected.

If you’re exploring options, Associated Bank’s savings and money market accounts are FDIC insured, flexible and designed to help your money work for you while keeping it close at hand.

How to build an emergency fund

Building an emergency fund takes time, but small steps make a big difference. Start by setting a target amount, then break it down into manageable monthly goals. Automating your savings contributions is one of the easiest ways to stay on track, like setting up a recurring transfer from checking to savings right after each payday so it happens without any extra effort. Unexpected windfalls, such as a tax refund or annual bonus, can also give your emergency fund a helpful boost.

Try to review your saving progress at least once a year. If your income, expenses or family situation change, you may need to adjust your target amount to ensure you’re still covered for several months of essential costs.

Keeping your emergency fund safe and accessible

Once you’ve built your fund, it’s important to protect it. Always keep your money in FDIC-insured accounts, which guarantee deposits up to the standard insurance limits per depositor, per bank.

Again, it’s important to separate your emergency savings from your everyday spending; you may need that mental barrier so you think twice before using it for something that’s not truly urgent.

Access should be simple but intentional to keep your fund ready for when you need it, but not at risk of impulse spending or subject to fees.

Strengthening your financial safety with an emergency fund

Your emergency fund isn’t just about money; it’s about stability and confidence. Start small, stay consistent and give your savings a dedicated place to grow.

When you’re ready to take the first step, explore how Associated Bank can help you build your financial safety net through savings accounts, money market options and other tools designed to help your money work for you.