{"id":169294,"date":"2024-03-13T13:44:21","date_gmt":"2024-03-13T19:44:21","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=169294"},"modified":"2024-05-03T05:09:51","modified_gmt":"2024-05-03T11:09:51","slug":"how-much-do-you-need-to-save-in-an-emergency-fund","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/how-much-do-you-need-to-save-in-an-emergency-fund","title":{"rendered":"Emergency Fund: How Much Do You Really Need in 2024?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC2164162280\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Setting up an&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/emergency-fund\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">emergency fund<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;is one of the fundamental pillars of financial well-being. And yes, saving can be hard, especially in 2024. According to a recent&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bankrate.com\/banking\/savings\/emergency-savings-report\/#emergency-savings\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">poll by Bankrate<\/span><\/a><span data-preserver-spaces=\"true\">, many of us are saving less, with the majority (63%) saying that recent high inflation means they\u2019re able to save less than before. As of 2024, only 44% of Americans could pay for an emergency expense of $1,000 or more from their savings. The majority would rely on credit cards, payment plans, or cutting spending elsewhere.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, not everyone\u2019s situation is quite as dire. About a third of us (30%) report having more savings this year than last year. And millennials are not doing so badly, with 35% of this generational group saying that they have more savings than they did a year ago. So, some of us are on the right track.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But how much is enough? Realistically, how much do you need to have in an emergency fund this year in order to be able to weather an unexpected life storm without relying on credit card debt?<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The other question often asked about emergency funds is: When is it not a stupid idea to invest yours? If you already have a decent amount saved, doesn\u2019t it make better financial sense to invest it and get a higher return over time than you will with a standard high-yield savings account?&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">How Much Do You Need in an Emergency Fund in 2024?&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The traditional wisdom you\u2019ll read in most advice columns and banking blogs is three to six months\u2019 worth of your living expenses. The reality is that most people probably need somewhere closer to nine months\u2019 worth of expenses to cover an emergency.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Why so much? Sean Fox, president of debt resolution at&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"http:\/\/www.achieve.com\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Achieve<\/span><\/a><span data-preserver-spaces=\"true\">, a digital personal finance company in San Mateo, California, tells BiggerPockets that this estimate is based on the fundamental facts of our lives today: \u201c\u2018During the pandemic, we saw firsthand how quickly someone can lose a job and all income. Getting back on one\u2019s feet, even after securing a new position, takes time.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">That\u2019s to say nothing of medical emergencies. These really can \u201ccause financial disaster,\u201d Fox says. That\u2019s the thing with emergencies: They\u2019re freak events that can plunge someone into financial hardship literally overnight.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And if you have other obligations, such as being a real estate investor, you\u2019ll need to save even more\u2014both for your personal emergencies, and separately for maintenance and emergencies at your investment properties.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">How to Start Saving for an Emergency Fund<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The nine-month figure is daunting even for stable, dual-income households. However, the fact is that everyone should save for an emergency fund, no matter their income level or situation. Fox\u2019s advice is to start by putting aside \u201cthe amount that would send you reaching for the credit card. A doctor\u2019s bill for $500? An appliance repair bill of $200? Begin there and build.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Fox adds that doing that will benefit you by applying an \u201cout-of-sight, out-of-mind\u201d mentality to that money, removing the temptation to spend it. This is worth doing even if you carry credit card debt.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The traditional approach is to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/money-488\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">pay off all your credit card debt<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;first before you start&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/money-490\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">saving<\/span><\/a><span data-preserver-spaces=\"true\">. This may only be realistic for some people, though. If you are not saving at all, you will just have to tap further into debt in case of an emergency. You may be better off making the minimum credit card repayments until you build up a sizeable emergency fund.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Emily Gallagher, an assistant professor of finance at the University of Colorado Boulder, told&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/select\/how-much-to-save-in-emergency-fund\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">CNBC<\/span><\/a><span data-preserver-spaces=\"true\">: \u2018\u2018Right now,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cash-transactions-now-making-up-a-third-of-sales\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash is king<\/span><\/a><span data-preserver-spaces=\"true\">. We don\u2019t know how long you\u2019ll need that extra money that you\u2019re using to pay your debt.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The best strategy is to drastically reduce your credit card spending and to save that money instead.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">When Is It a Good Idea to Invest Your Emergency Fund?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cAlmost never\u201d is the realistic answer. Investing is a long-term game. We\u2019re talking over a decade. A high-yield savings account rather than an investment account is still the way to go for most people.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cThe idea is that the funds must be easily accessible (within one or two business days), but not so accessible that you\u2019ll be tempted to spend it when it isn\u2019t an emergency,\u2019\u2019 Fox tells us.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There is only one category of people who might just get away with investing their cash reserves instead of saving them: people whose monthly expenses are significantly lower than their earnings. And even then, financial planner R.J. Weiss tells&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.businessinsider.com\/personal-finance\/types-of-people-who-dont-need-emergency-fund-2021-12\" target=\"_blank\" rel=\"noopener\"><em><span data-preserver-spaces=\"true\">Business Insider<\/span><\/em><\/a><span data-preserver-spaces=\"true\"> that the best strategy is to invest in a taxable investment account like a brokerage account. You\u2019ll have to pay taxes on your money if you do withdraw, but at least the funds will be easily accessible should you need them.&nbsp;<\/span><\/p>\n\n\n\n<div id=\"hero-block_4ebfcf706b3a550d3094c7e74241bf01\" class=\"first:mt-0 hero-block py-4    has-background has-slate-300-background-color has-text-color has-slate-800-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-2\/3 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-slate-color has-text-color has-large-font-size\"><strong>Protect your wealth legacy with an ironclad generational wealth plan<\/strong><\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px\">Taxes, insurance, interest, fees, bills\u2026how can you acquire wealth, let alone pass it down, when there are major pitfalls at every turn? In <em>Money for Tomorrow<\/em>, Whitney will help you build an ironclad wealth plan so you can safeguard your hard-earned wealth and pass it on for generations to come.&nbsp;&nbsp;<\/p>\n\n\n\n<div id=button-custom-event-block_474fe3ed73a7cedfd5d244fc702f91aa class='button-custom-event'>\n      <a href=\"https:\/\/store.biggerpockets.com\/products\/money-for-tomorrow\" x-on:click=\"window.analytics.track(&#039;Blog Block | Publishing: WWC&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/how-much-do-you-need-to-save-in-an-emergency-fund&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Get Your Copy<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/Untitled-design-62.png\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>As inflation continues to eat away at buying power, have the standards for optimal savings changed? And how much do you need to save for emergencies? <\/p>\n","protected":false},"author":613618,"featured_media":169297,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7397,7119],"tags":[],"class_list":["post-169294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-saving","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/169294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=169294"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/169294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/169297"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=169294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=169294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=169294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}