Information from the Washington State Department of Financial Institutions

Calculating Your Emergency Savings Needs

How Much Should I Have In Emergency Savings?

Most financial experts recommend that you have enough money to cover six to nine months of expenses.

How Do I Calculate How Much I Need for Emergency Savings?

When calculating how much you need factor in:

  • Housing costs: Rent or mortgage, property taxes, insurance, as well as utilities.
  • Food: Estimate your food expenses in your emergency savings fund.
  • Insurance: Factor in your monthly cost for insurance, medical and dental. If you’re laid off, you may be eligible to stay on your former employer’s health plan for a period of time through COBRA – the Consolidated Omnibus Budget Reconciliation Act.
  • Automobile: Any car payments you may have, gas, auto insurance, basic maintenance.
  • Debts: You’ll still need to make payment on any debts you owe. Credit cards and other debts you may owe.
  • Personal expenses: Don’t forget about these. Haircuts, clothes, toiletries, etc.

Where Should I Store My Emergency Savings Money?

An account that you can easily withdraw money from without penalty and earns a small amount of interest is a good place to store emergency savings.

Regular savings account or money market accounts are ideal for storing your emergency savings.

  • Regular savings accounts: Allow you to access your money whenever you want. A regular savings account is a good choice for beginners.
  • Money market savings account: Are a good option if you want higher interest rates but may require a higher minimum balance to avoid fees.