Although many Americans know much money they would need in their emergency fund to feel comfortable, reaching that goal is easier said than done.
Nearly 90% of Americans agree with the traditional rule of thumb: Save enough money to cover at least three months of expenses, according to Bankrate's "2024 Annual Emergency Savings Report."
And many feel like they would need about double that amount. A little over 60% of Americans say they'd need enough money saved to cover six months of expenses or more, per the report.
Regardless, in reality, most respondents fall short, according to the report, and wouldn't be able to cover a $1,000 emergency expense using their savings.
It's hard to save: 'Inflation has been a key culprit'
Most people say they're able to save less since so many essentials cost more, Bankrate reports.
That situation may improve soon.
Inflation overall decreased slightly in May compared to April, according to the U.S. Labor Department's May Consumer Price Index report.
But the cost of certain spending categories remained higher than last year. For instance, the price of juices and drinks is around 20% higher, as did the typical cost of car insurance, per the Labor Department.
"Inflation has been a key culprit standing in the way of further progress on the savings front," Mark Hamrick, Bankrate's senior economic analyst, says in Bankrate's report.
How to start an emergency fund
Many Americans prioritize increasing their emergency savings, Bankrate finds. And the good news is that it's never too late to get started.
First, take a look at your key expenses, such as your rent or mortgage payments, car insurance costs and grocery costs. Having a clear understanding of your expenses can help you figure out how much you should aim to save.
Then you can then decide how much money to set aside each week or month in order to reach that goal.
Remember, the kind of emergency fund that will help you feel comfortable isn't built overnight.
One easy way to make sure your emergency fund continues to grow is by automating your contributions. Many companies will allow you to automatically allocate a portion of paycheck to your savings account, which can help keep you from forgetting to move the money yourself.
"Automating the savings is the key to making it happen, particularly with household budgets so tight," Greg McBride, Bankrate's chief financial analyst, says in Bankrate's report.
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