How much should you really have saved in your emergency fund?

May 25, 2016

According to, almost a third of Americans have no emergency savings. That’s a scary prospect.  Saving can be a challenge for some, as it always seems something is popping up, but the peace of mind that comes from building an emergency fund is worth the extra effort.  So how much should you really try to save?

Base your emergency fund on your monthly expenses not your income. Don’t underestimate. Be sure you are including more than just fixed expenses. 

Think about if you were to lose your income.  How quickly would you be able to replace it?  If you would be able to replace it easily, saving six months worth of monthly expenses is a good starting goal. If replacing your income would be more challenging, you should increase the size of your emergency fund accordingly.  

Start with a buffer. If six months worth of monthly expenses sounds impossible to save right now, at least start with a buffer. Try to at least save enough so that you are not living paycheck to paycheck. A few ways to do so is to reduce discretionary spending and eliminate unnecessary fixed costs.

So, what’s the right answer? It depends on your personal situation. What are your immediate needs and what amount will help you sleep at night? The right savings vehicle can play a significant role in how quickly you can achieve the amount you hope to achieve in your fund. Our Texas Gulf Bank team has helped customers reach their savings goals for over 100 years. Contact us today to discuss the best steps to achieve your emergency fund savings goals.