How much money do Americans need in emergency savings to be comfortable, and how much do they have

Although many Americans know how much money they would need in their emergency fund to get comfortable, reaching that goal is easier said than done.

Nearly 90% of Americans agree with the traditional rule of thumb: Save enough money to cover at least three months of expenses, according to Bankrate’s “2024 Annual Emergency Savings Report.”

And many feel like them it will take about twice that amount. Just over 60% of Americans say they would need enough money saved to cover six months of expenses or more, according to the report.

Despite this, in reality, most respondents fail, according to the report, and would not be able to cover an emergency expense of $1,000 using their savings.

Most people say they are able to save less because so many essentials cost more, Bankrate reportss.

This situation may improve soon.

Overall, activity eased slightly in May compared to April, according to the US Labor Department’s May Consumer Price Index report.

But the cost of some categories of expenses remained higher than last year. For example, the price of juice and drinks is about 20% higher, as is the typical cost of car insurance, according to the Labor Department.

“Inflation has been a major culprit holding back further progress on the savings front,” says Mark Hamrick, Bankrate’s senior economic analyst in the Bankrate report.

Many Americans prioritize increasing their emergency savings, Bankrate finds. And the good news is that it’s never too late to start.

First, take a look at your major expenses, such as rent or mortgage payments, car insurance costs, and grocery costs. Having a clear understanding of your expenses can help you understand how much you should aim to save.

You can then decide how much money you need to set aside each week or month to reach that goal.

Remember, the kind of emergency fund that will help you feel comfortable isn’t built overnight.

An easy way to make sure your emergency fund keeps growing is by automating your contributions. Many companies will let you automatically allocate a portion of your paycheck to your savings account, which can help you remember to move the money yourself.

“Savings automation is key to making it happen, especially with household budgets so tight,” says Greg McBride, Bankrate’s chief financial analyst, in the Bankrate report.

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