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How much do you need in an emergency fund?

Sep 8, 2021
Empower Insights

Even a small amount of cash can help when unforeseen expenses arise

The COVID-19 pandemic taught Americans to expect the unexpected and changed the way we think about our finances. In fact, according to new research from Empower Retirement and Personal Capital, four in 10 people say they are spending less on non-essentials than they did before, and over half say having an emergency fund is a higher priority now.

But how much do you need in an emergency fund? Here’s how to figure it out:

1. Calculate your expenses

In order to understand how much money should be in your emergency savings, you should start by making a list of your recurring expenses and what you spend on them each month. Include expenses such as: rent, mortgage, childcare, student loans, groceries, utilities, car payment(s), medical bills, cable and internet. Add the amounts together to get your total monthly expenses.

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2. Use an emergency savings calculator

Now that you have a good idea of your monthly expenses, use this calculator to determine how much is suggested for your emergency fund.

Conventional financial wisdom says your household should have enough cash stowed away to cover three to six months of expenses. But it’s a good idea to save even if that amount feels out of reach. Even a small emergency fund could keep you from sliding into debt if you get hit with an unforeseen expense. Here are five ways to build an emergency fund (without really trying).

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Carefully consider the investment option’s objectives, risks, fees and expenses. Contact Empower Retirement for a prospectus, summary prospectus for SEC-registered products or disclosure document for unregistered products, if available, containing this information. Read each carefully before investing.

Securities, when presented, are offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC. GWFS is an affiliate of Empower Retirement, LLC; Great-West Funds, Inc.; and registered investment adviser, Advised Assets Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice.

IMPORTANT: The projections, or other information generated on the website by the investment analysis tool regarding the likelihood of various investment outcomes, are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The results may vary with each use and over time.

Investing involves risk, including possible loss of principal.

Insurance products are issued by or offered through Great-West Life & Annuity Insurance Company, Corporate Headquarters: Greenwood Village, CO; or in New York, by Great-West Life & Annuity Insurance Company of New York, Home Office: New York, NY. Guarantees are subject to the terms and conditions of the contract and the claims-paying ability of the insurer.

The managed account service is part of the Empower Retirement Advisory Services suite of services offered by Advised Assets Group, LLC, a registered investment adviser.

The Empower Institute is a research group within Empower Retirement, LLC.

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