How To Determine Your Emergency Fund Amount Goal
"How much money should be in my emergency fund?” is a popular question among those serious about saving money. Everybody knows they should have an emergency fund amount, but it is challenging to determine how much they should aim to save. Experts tend to agree that having at least three months' worth of expenses in an instant access savings account is ideal.
With that in mind, let's look at the best way to figure out how much is in the emergency fund!
How To Figure Out Your Optimal Emergency Fund Amount
Generally speaking, your emergency fund amount should equal between three and six months' worth of expenses. But that's quite a wide range, so understanding which end of the spectrum to target depends on a variety of risk and lifestyle factors.
Save Three To Four Months' Worth Of Expenses If:
- You don't have much debt
- You live in an area with a low cost of living
- You are relatively healthy
- You rent your home and your car is reliable
- You can find another job easily if you lose it
- Your job is stable
- You don't have children, pets, or other dependents that rely on your income
- You have a partner or relatives you can financially rely on if needed
Save Nearer To Six Months' Worth Of Expenses If:
- You live in an area with a high cost of living
- You have a medical condition or partake in high-risk hobbies like rock climbing
- You have children, pets, or other dependents that rely on you financially
- Finding a job would be difficult if you lost your current one
- Your job is not stable (i.e., seasonal worker, artist, gig worker, etc.)
- You don't have a partner or other relatives to financially rely on if needed
- You own your home
Save A Year's Worth Of Expenses If:
- You have a specialized job or are in a niche professional position that could require relocation or more time to replace
- You earn a high income
- You are nearing retirement or already retired
- You are the only provider to multiple dependents
A solid rule of thumb is this — if you see more risk potential, consider saving more.
How To Build An Emergency Fund Amount
Now you know how much should be in the emergency fund, it's time to start saving. It seems daunting at first, but following our step-by-step guide will clear up these worries:
- Set the goal — Based on the checklists above and your personal circumstances, choose how many months of expenses you need to save.
- Calculate one month — Add up everything you'd still need to pay every month if a crisis strikes, including rent, groceries, and utility bills. Leave out optional extras like buying presents and travel.
- Determine your total savings goal — Multiply your monthly expenses by the number of months you wish to save. For instance, if you need to save six months' expenses and one month equals $2,500, the answer to your "how much goes in the emergency fund" question is $15,000.
- Automate savings — You're much more likely to meet your emergency fund goal if you automate your monthly savings. The set amount is deposited into your savings account as soon as you get paid.
- Take advantage of savings opportunities — If you receive other income (e.g., tax refunds, side hustle income, gifts, etc.), put it in your emergency fund. You'll reach your goal much sooner.
What To Do If A Crisis Strikes Before You Build Up Your Emergency Fund Amount
Sadly, crises don't wait for you to have a chunk of money saved before appearing. Luckily, you can get installment loans from us at Wisconsin Auto Title Loans, Inc. to tide you over. Our customers use them for all kinds of emergency situations, such as:
- Paying medical bills
- Funding necessary home or auto repairs
- Paying utility bills to avoid late fees
- Funding urgent travel
Signature installment loans allow you to borrow between $100 and $1,500. You don't need any collateral because it's known as a "good faith loan." In other words, you just need three documents and your signature, alongside a promise to repay the amount.
On top of that, the process is wonderfully quick. If you've ever tried to get traditional loans, you may be skeptical of this because they often take weeks to process. However, our in-process procedure is only half an hour long, and you'll receive the money you need on the same or very next business day. Just please be aware that we will check your credit before approving your signature installment loan application. Speak to your local Wisconsin Auto Title Loans, Inc. branch if you'd like more information. They'll talk you through the details.
Get Installment Loans Today!
If a crisis strikes before you've built up your emergency fund amount, never fear; get a signature installment loan with us by filling in the online form or giving your local store a call!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.