The easiest way to figure it out is to ask yourself this: If I was out of work, how much money would it take to get me through three to six months? Think of things like the necessary, regular expenses you have (food, housing, utilities, transportation, etc.) and not the $400 you’d like to spend on a free-for-all shopping spree-that doesn’t count. Now remember: this number is going to look different for everyone. If that’s the case, all you need is $500 in your emergency fund.Ĭalculate the growth of your savings account with this free tool. The only exception here is if your income is under $20,000 a year. If you’re just getting started, you only need $1,000 in your starter emergency fund before you move on to Baby Step 2 (paying off all debt except the house). And if you’re not, here’s a quick overview:īaby Step 1: Save $1,000 for a starter emergency fund.īaby Step 2: Pay off all debt (except the house) using the debt snowball.īaby Step 3: Save three to six months of expenses in a fully funded emergency fund.īaby Step 4: Invest 15% of your household income in retirement.īaby Step 5: Save for your children’s college fund. If you’re familiar with the 7 Baby Steps, this is Baby Step 1. So, if you’re a newbie in the savings game, the best place to start is with your emergency fund. With a little discipline and some intentionality, you can be weird and abnormal with plenty of savings! Less than $1,000! This is no time to be “average” or “normal.” Normal is broke. How Much Money Should I Keep in Emergency Savings?Īccording to our research, 49% of Americans have less than $1,000 saved for an emergency. Next question: what expenses do you have coming up in the next few months? Are you planning a big trip soon? You can start budgeting and saving for those things in something we like to call a sinking fund (more on that later too). What happens if an emergency comes up? Do you have enough money to cover a blown tire or (heaven forbid) a trip to the ER? That, friends, is what you call an emergency fund (more on that later). When you’re rocking a budget, you can use it to plan for the stuff of life. But no matter what your savings goal is, it should always start with that zero-based budget. So, the next question is, what should your savings goal be? Well, it depends on your lifestyle and what you want to achieve in life. To do that, you need to be intentional and have a plan with a goal-a savings goal. But before you can know how much you should have in savings, you have to figure out what you’re saving for first. You know your family (maybe a little too much sometimes) and your financial situation better than anyone. The only person who can truly know how much you should have in savings is. That just means you get to have some fun telling your wallet full of George Washingtons where to go-especially a savings account. In order to know how much you should have in savings, you’ve got to start with a budget-a zero-based budget that is. But before we dive in, let’s talk about the key to success when it comes to saving: budgeting. While we aren’t experts in rocket science (and the world of nap schedules still makes us scratch our heads), we are experts in money. But those of us who are still trying to figure out how to get two kids to nap at the same time are pondering the simpler things in life: How much should I have in savings? The greatest minds of the world have discovered how to get a man on the moon, how electricity works and, more recently, how to get cars to drive themselves.
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