march ey blog imge

Do you have enough emergency savings?

Life happens. And sometimes, it brings a financial hardship to your doorstep, leaving you scrambling to find the cash needed to handle the unexpected and often, unwelcome situation.


Twenty-three percent of Americans have zero savings to turn to in an emergency, according to a recent survey by Many people turn to credit cards or loans to weather a financial storm. But when you’re already struggling to keep up with bills, taking on more debt may not be your best option.


To guard against the potentially serious and lasting repercussions of a financial emergency, you need an emergency savings fund.


What should an emergency fund be used for?

Opinions differ on what kinds of situation warrant drawing money from an emergency fund. But typically, the fund is meant to help you through a job loss, a serious illness or injury, unforeseen car expenses, unanticipated home repairs or a similar, major drain on your finances.


How much savings do you need?

Generally, it’s good to have enough cash in your emergency fund to cover at least three to six months of basic living expenses, including:

  • Mortgage or rent payments
  • Groceries
  • Utilities
  • Transportation
  • Insurance premiums
  • Fixed loan payments
  • Minimum credit card payments

Certain costs you can generally suspend during an emergency – like going out to movies, dining out and saving for college and retirement. These aren’t typically considered basic living expenses.


Where should you keep your fund?

Choose a secure account that offers quick and easy access to your money while providing some level of investment interest. Basically, that means a money market account at a bank or credit union, a money market fund or a high-yield online savings account.


Emergency fund tips

  • A household budget can help you find ways to cut costs, reduce debt and increase savings. You can include regular contributions to savings as a budget item.
  • Save what you can. Even if money’s tight now, maybe you’ll be able to save more later. Say you put $40 a month into a money market account earning 1% interest. A year later, you’ll have $483, which might cover, say, car repairs.
  • Consider setting up automatic monthly transfers from your checking account to your emergency fund. Or, ask your employer whether you can authorize direct deposit from your paycheck.
  • Increase your savings contributions if you get a pay raise.
  • Whenever you receive extra income, like a tax refund or bonus, add it to your fund.
  • Resist tapping your fund for “wants,” like a new TV or patio furniture.
  • Whenever you draw from the fund, try to restore it to goal size as soon as possible.
  • Revisit your fund at least once a year or whenever you have a major life change, like adding a child to your family or having one leave the nest. You’ll want to account for any increase or decrease in your basic living expenses and in the amount of savings you need.

Getting Guidance to Save

WAEPA Members are eligible for FREE Financial Wellness Planning through our partnership with EY. If you’re looking for assistance with building an emergency savings fund, paying down debt, or even how to plan for the cost of your child’s education, the EY portal has calculators, resources, and even Certified Financial Planners (CFP®) who can help you along the way.


If you haven’t already registered for the EY Financial Planning Center® site, visit to learn more and get started.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.