Have you ever had one of those months? The water heater stops heating, the dishwasher stops washing, and your family ends up on a first-name basis with the nurse at urgent care. Then, as you’re driving to work, you notice smoke coming from under the hood.
Unexpected expenses happen to all of us, and sometimes they seem to come in waves. That’s when an emergency fund can make all the difference.
One survey found that more than two-thirds of Americans are not confident they have enough emergency savings to cover one month’s worth of expenses. Another survey found that 47% of Americans said they wouldn’t be able to cover an unexpected $1,000 expense using money from their savings account.1
How Much Money?
How large should an emergency fund be? There is no one-size-fits-all answer. The ideal amount depends on your financial situation and lifestyle.
For example, if you own a home or have dependents, you may be more likely to face unexpected expenses. Likewise, if a job loss affects your income, you may need emergency savings that can cover several months of living expenses.
Coming Up with Cash
If saving several months’ worth of expenses seems overwhelming, don’t despair. Start with a more manageable goal, such as saving $1,000, and build your emergency fund over time. Setting up automatic monthly transfers can make saving easier and help you stay consistent.
As your savings grow, you may be tempted to dip into the account for something other than a true emergency. Try to resist that temptation. Instead, budget and save separately for predictable expenses, such as vacations, home maintenance, or holiday spending.
Where Do I Put It?
Many people keep their emergency funds in traditional savings accounts, which typically offer modest returns while providing easy access to cash. The Federal Deposit Insurance Corporation (FDIC) insures eligible bank deposits for up to $250,000 per depositor, per insured institution, including principal and accrued interest.2 Accounts held in different ownership categories, such as individual, joint, retirement, and trust accounts, may qualify for separate FDIC coverage.
Others choose money market accounts or money market funds. While money market accounts are deposit accounts offered by banks, money market funds are investment funds that invest primarily in short-term, high-quality securities and are generally used for liquidity and capital preservation. Unlike bank accounts, money market funds are not insured or guaranteed by the FDIC or any other government agency, and their share price is not guaranteed.
The appropriate place to hold emergency savings will depend on factors such as liquidity needs, account balances, and overall financial circumstances.
The only thing you can count on about unexpected expenses is that they’ll eventually happen. Having an emergency fund can help reduce the financial stress that often comes with life’s surprises. If you don’t have emergency savings today, consider taking small, consistent steps to build a financial cushion for the future.
At SHJ Wealth Advisors, we believe a strong financial plan starts with a solid foundation. Making sure you have an appropriate emergency fund in place is one of the key building blocks that allows the rest of your financial plan to grow with confidence. Please reach out to Info@shjwealthadvisors.com if you would like to find a time to meet with one of our CFP® Professionals and thanks for reading!
Disclosures:
- Bankrate.com, February 4, 2026
- FDIC.gov, 2025
- Investopedia.com, April 22, 2026
Money market mutual funds are sold by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
