How many months expenses should i save

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Banking support Today's rates Your Money insights Build an emergency fund. Savings solutions. Financial education Resources. Enroll in an employer's plan Open an account Download our mobile app Need online access? Plan sponsors Consultants Advisors. Insights Insights Home. How much should I save each month?

When someone asks how much money they should save each month, I throw them a curveball reply:. That's a serious question. Your ideal savings rate depends on your specific, long-term reasons for saving. Your short-term savings can get used to vacation in Aruba, buy holiday gifts or pay your taxes.

You might use this money to replace your dishwasher, fix your car's timing belt, cover a major insurance deductible, stay afloat when you're between jobs and make a down payment on a home. Now back to the original question: How much should you save a month?

Let's break this down by goal:. Sound daunting? Don't worry: your employer match, if you have one, counts. Our online tools can help you calculate your needs for retirement and other financial goals. You should also consider establishing an "emergency fund" that can cover months of your living expenses.

Nonessential shopping. Savings for a second home, college, or other goals. If you're able, you might want to think about expanding your emergency savings. Here are some scenarios where having more in your savings could benefit you: During a recession when unemployment rates are higher and the length of unemployment is often longer. If you're in a high-risk industry where layoffs are common. If your income isn't steady. If you're retired and most of your money is in more-volatile stock and bond investments.

The important thing is that you've started saving something. This hypothetical illustration doesn't account for inflation. You know roughly how much you need to save for emergencies. But where should you keep it? Find out where to put your emergency fund.

At our house since we like the peace of mind that comes with the emergency fund, we have saved 12 months of expenses , if not a little bit more. Where you save your emergency fund is really up to you. The only thing I would say about this is to make sure that you put the money somewhere that you can get at it right away if you need to. My personal preference for a good place to save the money is a good high-yield savings account. To find a listing of good banks that you could use, check out our list of current bank rates.

Keep it liquid! How much do you have saved in your large emergency fund? Do you have closer to 3 or 12 months of savings set aside? Trim is a free service that helps you to save money by canceling unused subscriptions, negotiating lower costs, automating savings and more. This past month or so we've been highlighting savings tips for the summer, and we've talked about things like saving on food, saving at the….

Here are some creative strategies to trim your expenses, without cutting your lifestyle too drastically. Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again.

You can find out more about him on the about page. Don't forget to say hi on Pinterest , Twitter or Facebook! Even though it has always been important to be prepared like this, it is vital now. Thanks for sharing this. Mirandas last blog post.. Online Personal Finance Resources.