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Do you have enough in your emergency fund?

A mom and dad reviews how much they have in their emergency fund over breakfast.
September 25, 2018

By Kathryn Pins

Seventy-eight percent of full-time workers said they live paycheck to paycheck, according to a recent report from CareerBuilder. That large number of Americans includes those making $100,000 or more a year. So, if we’re living paycheck to paycheck, how are we prioritizing our emergency funds and do we have enough for those unexpected expenses? We’re going to break down how to much you need and the many ways you can up your savings game.

When would you use an emergency fund?

No one thinks that they will get seriously ill or lose their job, but it can happen. Having an emergency fund helps ensure that you won’t need to take out a loan if something were to happen to you or someone in your family. So what qualifies as an emergency? Job loss is one of the most common emergencies. A major medical bill or needed home repair would also count as emergencies. For other expenses, having a regular savings account separate from your emergency account will help out. Those expenses could include holiday shopping and saving for fun home projects. We’ll talk more about Supplemental Savings accounts in a bit.

How much do you need for a rainy day?

Many experts say you need at least six months’ worth of expenses. However, that may not be enough for many people. You may need more savings if your income isn’t steady, if you’re in a high-risk industry or job (such as a tech startup), or if an upcoming recession is predicted.

With those scenarios in mind, here is what you need to plan for…




Debt expenses

Health care

Other necessary personal expenses

You should not include expenses that can be cut, such as vacations, shopping and dining out. It may take some time to estimate your expenses, but it’s going to be worth it. We promise.

Don’t have more than six months?

So you did the math and you’re short. No need to panic, we’re here to help! First, any amount in savings is better than nothing. If you only have three months, you’re in OK shape but you can improve. Second, to set up an emergency fund, you need to know where one should go. An emergency fund should not be susceptible to the changes of the market place and needs to be liquid. That’s why you should keep your “what if” dollars in a savings account with a high-interest rate.  

It’s best if your emergency account is separate than your regular savings account so you’re not tempted to dip into it for non-emergencies. Alliant offers Supplemental Savings accounts so you can get a high rate and keep your different savings goals organized.

Once you pick an account, make your emergency fund a priority and contribute anything you can. Cut back on things like coffee shop drinks and eating out. Calculate how much you can save by cutting those extra expenses and put that money in your fund instead. Set up automatic transfers each month or use an app like Acorns to round your purchases up. On a three-paycheck month, devote a paycheck to your emergency savings. If you’re struggling for motivation, adopt a clever way to save. At the end of the day, financial security could help you breathe a little easier.

Kathryn Pins is a marketing content specialist at Alliant. She’s passionate about finding and communicating meaningful financial information with Money Mentor readers. Kathryn is a saver who gets more excited about certificates and her Roth IRA than shopping. When she does spend her earnings, it’s on furthering her education, travel, unique experiences, and loved ones.