How much should I put towards emergency funds?

How Much Money Do I Need for My Emergency Fund?

Picture this: you find out your car needs a major repair. The next day, your fridge stops working. Frustrating, yes—but it’s a lot less stressful when you have some cash set aside to absorb the hit. An emergency fund(money that’s reserved for unexpected expenses or a temporary loss of income) is one of the smartest things you can do to protect yourself financially.¹

Start with the Essentials (Not Your Whole Lifestyle)

How much money is enough for an emergency fund? A common guideline isthree to six months of expenses.When calculating that amount, focus onessential spending—things like housing, utilities, groceries, healthcare, and minimum debt payments—rather than including every discretionary extra.^1,2

Let’s say you normally spend $4,000 a month, but you could get by at $2,500 by trimming non-essentials. In this scenario, your three-month “essentials only” target would be to put aside about $7,500instead of$12,000.²

Calibrate for Your Situation

Your ideal amount can shift up or down. This is SUPER crucial. Consider that there is two ways to view this: Emotional and Logical.  Know that you will do what is emotional. If you have a single income, variable freelance work, or dependents you support, aim higher for your emergency fund. If you have multiple stable incomes and lower fixed costs, you could get away with a slightly smaller fund.²

Make the Target Feel Doable

• Set a micro-goalfirst (e.g., $500 or $1,000). Next, build up to one month of essentials. Keep saving until you get to three to six months.¹
• Automate contributionsfrom each paycheck. Splitting up your direct deposits can make steady progress feel effortless.¹
• Put windfalls like bonuses or refunds to work.Even a small boost can put you that much closer to having an ideal emergency cushion.¹
• Remember: a credit card isn’t a smart safety net.Putting things on credit incurs more and more debt. Savings give you breathing room.

Where to Keep It

Aim forsafe, liquid, and separate.Having a savings account at an FDIC- or NCUA-insured institution keeps your money safe and accessible (and typically earns a bit more than checking). Some people earmark a portion of their checking account total, but that only works if you don’t spend it.

A Note on “Fixed Numbers”

You may see benchmarks that translate six months of average household expenses to roughly$35,000. Treat that as context, not a mandate—your ideal emergency fund should reflectyour essential costsand risk factors.^2,3

Pro Tip:Start small, automate your savings, and just let it grow over time. Before you know it, you’ll have the breathing room that can make all the difference. Just like you might stock extra batteries for a power outage, building a cash cushion is a way of preparing for whatever life throws at you.¹

What to Know About Opening an IRA for the First Time

An Individual Retirement Account (IRA) is one of the most flexible ways to invest for the future. It’s designed to give your money more time and opportunity to grow through tax advantages—whether you choose a traditional IRA or a Roth IRA.⁴

Know the Basics Before You Start

An IRA isn’t tied to an employer, so you can open one through a financial institution that offers the type of account you want.^4,5BothTraditional IRAsandRoth IRAshave annual contribution limits, income rules, and potential tax benefits that make it worth understanding the differences before you get started.⁶

• Traditional IRA:Contributions may be tax-deductible, and withdrawals are taxed in retirement.⁶
• Roth IRA:Contributions are made with after-tax dollars, but qualified withdrawals in retirement are tax-free.⁶
• Once you reach age 73,you must begin taking the required minimum distributions from a traditional IRA in most circumstances. Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10 percent federal income tax penalty.
• The original Roth IRA owneris not required to take minimum annual withdrawals. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner's death.

Check Your Eligibility and Limits

For 2026, you can contribute up to the annual limit set by the IRS. Income restrictions may apply for Roth IRAs, and contributions for both types must come from earned income.^7,8

Decide How Your IRA Fits Your Strategy

After your IRA is open, the next step is choosing how it will support your bigger financial picture. That decision depends on your goals, time horizon, and how comfortable you are with risk. We can walk you through your options and help align your IRA with your overall strategy.

<sup>1. Bankrate, July 31, 2025.
2. CNBC, June 27, 2024.
3. Investopedia, May 5, 2025.
4. NerdWallet, June 4, 2025.
5. Bankrate, June 23, 2025.
6. Charles Schwab, March 26, 2025. 
7. Internal Revenue Service, August 26, 2025. 
8. NerdWallet, April 16, 2025.</sup>