Even if you’re a budgeting pro, a job loss or an unexpected expense — a roof leak, an appliance repair, or less money in your paycheck than expected — can throw you off track financially. That’s where an emergency savings fund comes into play.

How much money should you have in your emergency savings fund? Ideally, it’s enough to cover costs that aren’t a part of your normal spending routine.

An emergency fund can turn a surprise expense from a disaster into a simple annoyance. But in 2022, Americans had on average more credit card debt — $5,910, according to credit bureau Experian — than they did in savings — $5,011, according to New York Life’s Wealth Watch survey. Here’s how much to save in an emergency fund and how to build one.

What is an emergency fund?

An emergency fund is money in a savings account that you use only for emergencies that aren’t part of typical expenditures. These might include:

• A car repair or home repair

• Paying for housing, insurance, food, and other key expenses if you lose your job or your household income drops

• An unexpected medical bill

• Unexpected travel expenses (for example, visiting a sick family member)

One of the major benefits of an emergency fund is that it can prevent you from needing to use a loan or a credit card to pay for the expense. Because of interest rates and fees, credit card debt can quickly become overwhelming if you don’t pay the balance off in full, which was the case for more than half of consumers in the Consumer Financial Protection Bureau’s Making Ends Meet survey. Additional debt can make it difficult for you to build up any savings.

How much money should you keep in an emergency fund?

As a general rule of thumb, most financial experts recommend keeping three to six months' worth of essential expenses in an emergency fund. For example, if your monthly expenses are $3,000, your eventual goal would be to keep between $9,000 and $18,000 in an emergency fund. However, the Making Ends Meet survey found that 37% of households couldn’t cover more than a month’s worth of expenses if they lost their main source of income.

List your most important expenses to determine how much money you should save in your emergency fund. Consider categories such as:

• Housing

• Utilities

• Food

• Health care and medication

• School tuition

• Cell phone and internet

• Transportation (including

• Insurance

• Childcare

• Debt payments

• Taxes

Once you have a dollar amount, multiply it by three or six to see how much money you should save in your emergency fund. Remember — you'll need to replenish your emergency fund if you need to dip into it.

How to build an emergency fund

If you can save three to six months of expenses in a fund over time, that’s great, but any amount can be helpful if it keeps you from relying solely on credit cards or loans during an already stressful situation.

If funds are tight, start small and build from there. Even small amounts add up. Let’s say you save $10 a week — at the end of one year, you would have $520, not including the interest you might earn. Try these tips to get into the saving habit:

Set savings goals. Breaking up your overall goal into smaller savings makes saving easier. Use a savings goal calculator to determine how long it will take to reach your goal. Watching your money grow can provide motivation.

Save automatically. Many people find it easier to save money when they don’t have a chance to spend it. To do that, set up a recurring deposit from your checking account to your emergency fund or directly deposit a portion of your paycheck into your emergency fund account.

Shave down living expenses. Make a budget to see where all your money is going. You may find you can shift money from spending categories such as entertainment, clothing, and dining to an emergency fund. You can also look into long-term money-saving opportunities like a monthly subscription audit, insurance bundling, and debt consolidation.

Save unexpected money. Anytime you receive money that you weren’t expecting or don't need to use to pay your bills, add it to your emergency fund. That could include monetary gifts or tax refunds.

Where to keep an emergency fund

Ideally, keep your emergency fund money somewhere safe, easy to access, and separate from the money you regularly spend. An interest-earning savings account at a bank — online or brick-and-mortar — or a credit union is likely your best choice.

Consider these savings account options:

Money market accounts: These savings accounts offer some features of a checking account, like the ability to use a debit card and write checks from the account. Money market accounts also tend to have high interest rates. However, you may need to keep a large amount of money in the account to avoid paying monthly maintenance fees.

Short-term certificate of deposit (CD): With compound interest and higher interest rates, a CD with a short term of one to three months means you can earn interest without having your money tied up for too long.

Traditional savings accounts: Large brick-and-mortar banks offer little interest for savings accounts, but they can be convenient, especially if you prefer to do your banking in person.

High-yield savings accounts: These accounts operate like regular savings accounts but have much higher interest rates. Credit unions and online banks tend to offer much higher interest rates than traditional banks.

Whatever you choose, ensure your account is protected by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA). NCUA- or FDIC-insured accounts are covered up to $250,000. Look for options with low to no minimum deposit amounts, low or no fees, and offer easy access to your money via ATM access, in-person banking, or a mobile app.