How Much Do You Really Need in Your Emergency Fund? Here's What Experts Recommend

Everyone needs an emergency fund. Life has a way of throwing us for a loop when we least expect it, whether that's a surprise medical bill, layoff or pricey car repair. An emergency fund can help you weather these storms without going into debt.

But how much should you have in reserve? That depends on a range of factors, including how much you can afford to put aside right now and the other financial priorities you're juggling. To help you estimate your ideal amount, we spoke to some personal finance experts. Here's what they say.

Read more: Supercharge Your Savings: Surefire Tips to Grow Your Money Faster

How much should you have in an emergency fund?

At the bare minimum, your emergency fund should have at least enough money to cover one month of expenses. However, the more you can set aside, the better. As you’re building your emergency fund, it’s important to have a solid understanding of essential expenses you must cover every month, including:

• Housing
• Groceries
• Insurance
• Household bills (electricity, water, gas, internet, etc.)
• Transportation
• Health care costs (such as prescriptions)

Use the following recommendations as a guide to determine you should aim to have in your emergency fund.

💳 When you have debt: At least 1 month’s worth of expenses

Experts typically recommend having three to six months’ worth of living expenses in your emergency fund. But if you have high-interest debt, balancing saving money and paying off that debt can feel impossible. 

You shouldn’t sacrifice your financial safety net to speed up debt payoff, said Erin Lowry, author of the Broke Millennial book series. “One month of your bare essential living expenses should be the bare minimum emergency fund for someone who is trying to pay off debt."

🏁 A good starting point: At least 3 months’ worth of expenses 

If you're just starting to save, aim for at least three months’ worth of expenses, said Jared Andreoli, a certified financial planner and founder of Simplicity Financial. Reevaluate this amount each year as factors change, such as your income, living expenses and so on. 

Once your emergency fund is bigger than 12 months’ worth of living expenses, Andreoli recommends transitioning into your next saving goal, such as saving for a home down payment, increasing retirement contributions or opening an IRA.

🛟 When you need more security: At least 6 months’ worth of expenses 

To get through an unexpected financial setback, Andrea Osorio, senior wealth advisor at Citi Personal Wealth Management, recommends having at least six months’ worth of expenses in your emergency fund. However, Osorio notes that you should evaluate your individual circumstances, financial obligations and job security to determine your financial needs.

To get started, Osorio recommends asking yourself a few questions: 

• Do you have a dual-income household?
• Are you someone with minimal obligations and no dependents? Or do others depend on your income?
• Do you have a mortgage or other large recurring debts? 
• If you lose your job, how difficult would it be to find another job?

Based on these factors, you may want to increase your reserve amount to 12 months, or you may realize you have the flexibility to decrease it to only three months, Osorio added. 

🌟 The gold standard for most: 3 to 6 months’ worth of expenses 

While there isn’t a one-size-fits-all number, the rule of thumb many experts recommend is having at least three to six months’ worth of expenses saved so you can cover all fixed monthly costs, such as your mortgage or rent, debt payments and utilities. 

“Your life circumstances are an important part of the equation, too,” said Frank Newman, chartered financial analyst at Ally Financial. If you live on your own and you don’t have any dependents, three to six months’ worth of savings may be just right. However, a family with multiple dependents under one income could require a bigger emergency fund to ease any setbacks, he added. 

🚨 When you don't have a fallback: 6 to 12 months’ worth of expenses 

The right emergency fund is dependent on your individual circumstances, said Elizabeth Plot, founder of Primas Financial Planning, but she encourages clients to work toward saving six to 12 months’ worth of expenses when feasible. If you don’t have investment accounts, are self-employed or don’t have a support network to fall back on in an emergency, you should consider building a larger emergency fund, she added.

🧓 When you're close to retirement: More than 1 year’s worth of expenses 

Anyone approaching retirement should be even more concerned with how much they’re saving, so they can avoid withdrawing their investments during market downturns, said Jill Schlesinger, host of the Jill on Money podcast and business analyst for CBS News.

In this case, she recommends bumping up your emergency reserve to one or even two years’ worth of expenses because you won't have the opportunity to replenish your emergency fund as easily when you stop working. 

Where to keep your emergency fund

You should keep your emergency fund in an accessible account that’s separate from your primary checking account so you aren’t tempted to use it in a nonemergency situation, Osorio said. 

Focus on accounts with no minimum balance requirements and no monthly fees, or else you’re losing value in your emergency savings, said Newman. “We know that emergencies happen at all times of the day, so find a bank with easy access to your accounts like a great mobile app, flexible money connections and 24/7 customer service,” he said.

Here are a few places you should keep your emergency fund:

• A high-yield savings account: High-yield savings accounts are interest-earning accounts that are typically found at online-only banks. The best high-yield savings accounts offer annual percentage yields, or APYs, up to 5%. HYSAs are great for an emergency fund because they earn competitive interest and you can access the funds when you need them.

• Traditional savings account: Most banks offer traditional savings accounts, but these accounts typically pay little interest on your savings. The average annual percentage yield for a savings account is only 0.41%, according to the Federal Deposit Insurance Corporation. However, if your priority is convenience and not interest growth, maintaining an emergency fund at the same bank as your checking account might be a good move. 

• Money market account: A money market account combines the accessibility of a checking account with the interest-earning benefits of a savings account. Unlike most savings accounts, MMAs generally offer check-writing privileges and debit card access. Some of the best MMAs offer APYs over 4%. 

Ways to save for an emergency fund 

Getting into the habit of saving regularly -- even a small amount -- is key to reaching your goal. Here are a few ways to add more to your emergency savings: 

• Automate transfers to a high-yield savings account. Set up automatic transfers from your checking account to your high-yield savings account, so a set amount goes to your emergency fund at the end of each month. 

• Establish a budget. Evaluate your monthly expenses and bills to see where you can cut back to put more toward your savings. You may be able to downgrade your cell phone plan or cancel a streaming subscription to save more. A budgeting app can help you run the numbers.

• Put extra income directly into your emergency fund. Set aside any cash windfalls, such as a work bonus, birthday money or your tax refund. These extra funds can help you get ahead of your goal. 

When to use the money in an emergency fund

The purpose of an emergency fund is to avoid draining your checking or savings account when you're hit with unexpected expenses. It also keeps you from taking on high-interest debt with a credit card or personal loan. 

“You should only use your emergency fund when facing a real emergency such as a job loss, medical emergency or caring for a loved one in a time of need,” said Osorio. “An emergency fund should not be used as vacation money or as a regular spending account.”

What to do once you’ve reached your savings goal

Financial goals are always a balancing act. You don’t necessarily need to prioritize one savings goal before moving to another -- you can juggle several if your budget allows you to. 

But once you reach your goal, you can reallocate your money to other goals, said Lowry. “It's also a good practice to reevaluate your financial goals every few months to ensure they're still in your best interest and aligned with what you want to achieve,” she said.

And just because you’ve reached one savings goal doesn’t mean you should stop putting money away. “You'll have the freedom to add the excess amount to your regular deposit account, to invest it or even add it to that vacation fund you’ve been wanting to contribute to,” said Osorio. 

This article includes some material that was previously published on NextAdvisor, which like CNET was previously owned by Red Ventures. It has been edited and updated by CNET Money editors.