Is Your Emergency Fund Big Enough? Ask Yourself These 4 Questions to Find Out


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They’re important points that will help you know if your savings are up to par.

Key points

  • It’s important to keep money in the bank for emergencies. 
  • Underfunding your emergency savings could leave you stuck with unwanted debt.
  • Assessing the amount you have saved and asking yourself a few questions can help you decide if you have enough. 

You never know when some aspect of your life might implode. You could end up losing your job, getting stuck with a costly home or auto repair, or falling victim to an injury that not only forces you out of work temporarily, but also leaves you with a stack of medical bills.

That’s why it’s so important to build yourself an emergency fund and keep that cash safely tucked away in a savings account. And if you already have some money set aside for emergencies, give yourself a much-deserved pat on the back for a job well done. 

But is your emergency fund sufficient to cover your needs? Or should you actually be pushing yourself to save more? Run through these key questions to find out.

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1. Can I cover at least three months of expenses with my savings?

If you lose your job, you’ll want money in savings to cover your bills while you look for a new one. And so to that end, it’s a good idea to have enough cash to cover at least three full months’ worth of bills, as it might easily take that long to go from being unemployed to getting hired. 

To be clear, though, three months is really the minimum number of expenses you should be able to cover with savings. Suze Orman, for example, says you should aim for eight to 12 months’ worth of bills in the bank. So even if you’re at that three-month point, you might still want to aim higher and save more.

You might manage to cover a small home repair by cutting back on other types of spending. But for a $5,000 repair, you’ll probably need to tap your savings. On top of having enough money to pay for three months of bills, if you’re a homeowner, you should pad your savings with extra cash to cover an expense like a new air conditioning system or roof. 

3. Have I saved enough to cover my health insurance deductible?

Your health insurance deductible is the sum you have to pay before your insurance company starts picking up the tab for the bills you rack up. It’s important to have extra money in your savings to cover that deductible, no matter what it is. So if, for example, you have a $1,400 annual deductible, your emergency fund should have at least three months’ worth of bills plus $1,400 in case you get hurt or sick.

4. Do I have enough to cover unplanned car repairs?

Just as home repairs can pop up out of the blue, so too can auto repairs arise when you least expect them to. And so it’s a good idea to pad your emergency savings to cover things like new tires or brakes, or whatever else might go wrong with your car. This especially applies if you drive an older vehicle that’s no longer covered by any sort of warranty.

Having an emergency fund is a step toward giving yourself the financial security you need. But it’s important to assess your savings and make sure you have enough. And if not, start making changes to free up more cash to stick in the bank so you get the peace of mind you deserve.

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