What amount in an “Emergency Fund” helps the most?

The Good Ol’ Emergency Fund - the hallmark of financial advice among Gurus and Professionals alike.

• 3 to 6 months cash saved

• put it in a HYSA (high yield savings account)

• get $1000 saved

• make sure you do this step before moving on to the next one

But how much actually helps us - psychologically?

It is obvious to us that more money available to us is better than less. Most of us have probably had something come up as an unexpected expense. A flat tire. An unplanned bill. A house repair. Something breaks. Do I have money for this? How we answer that can be the difference between these being major inconveniences to serious financial burdens.

Is there an actual number in emergency fund savings that helps us feel the best about our situation?

Turns out, according to a new Vanguard study, there is!

$2000 seems to be the magic number according to the study called "The relationship between emergency savings, financial well-being, and financial stress”

Having that amount saved can increase your financial well-being by 21%. It also correlates to increased time spent on finances and worker productivity due to reduced financial anxiety.

I often don’t have direct advice in these articles but this might be the time to say - Get $2000 in an emergency fund if you don’t already. It will increase your financial well-being!

I linked the study above. Here is an article by CNBC about the Vanguard study.

https://apple.news/AcVLFSIA3Q_yPhCWXN1lf4w

As always, if you come across a financially related article you’d like to send my way please do! 

Best place to send them is to me.

More next time!

Jonathan