This is the minimum amount of savings you need to improve your financial well-being
That's why experts recommend putting aside some money in an emergency savings fund. And according to a new survey by Vanguard, even a modest emergency fund can dramatically lower stress and elevate your financial health.
So what's the magic number for improving financial well-being? And what can you do to achieve it?
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Vanguard researchers surveyed more than 12,400 Vanguard investors to understand the impact of emergency savings on financial well-being. They found that respondents who had at least $2,000 saved showed a 21% increase in financial well-being, while those with three to six months' worth of expenses saved had another 13% increase, even after accounting for income, debt type, and financial assets.
'People with emergency savings have a higher level of financial well-being, spend less time thinking about and dealing with their finances, and are less distracted at work,' said Paulo Costa, Vanguard's senior behavioral economist, in a statement.
According to the research, investors without emergency savings reported higher levels of financial stress. On average, they spent 7.3 hours per week thinking about and dealing with their finances, compared with just 3.7 hours for those with at least $2,000 in emergency savings.
Although $2,000 isn't a particularly large sum, many Americans have even less than that in their savings accounts — or nothing at all.
According to our 2025 State of Savings Report, one-third (33%) of Americans couldn't cover bills for even one month if they lost their income. Meanwhile, only 26% said they had enough savings to cover one to three months of expenses.
Read more: How much money should I have in an emergency savings account?
If you have competing financial obligations like housing, debt payments, school tuition, etc., saving for emergencies may not be a priority. But that's the thing about emergencies: You can't predict when one will happen, but you can be certain it will happen at some point. When that day arrives, you'll be better prepared to cover the cost, avoid racking up debt, and protect your mental health with an emergency fund in place.
Whether your goal is $2,000 or $20,000, it's never too late to get started. Here are a few best practices for building and maintaining an emergency fund:
Experts typically recommend saving three to six months of essential expenses in an emergency fund, but the right amount depends on your personal situation. For example, if you have an unsteady income, you may want to aim for nine to 12 months' worth of expenses.
Also, keep in mind that the amount of money you're able to comfortably save each month may fluctuate depending on how your income and financial obligations change over time. It's important to be flexible when it comes to your savings strategy and adjust it as your financial situation evolves.
Once you've built a nice financial cushion, you may be tempted to dip into it. But this defeats the purpose of an emergency fund. Be honest with yourself about what constitutes a financial emergency and when it's appropriate to use that money.
If you use your fund for an unexpected expense, make a plan to rebuild it. For example, you might decide to set aside a portion of your next few paychecks or temporarily cut back on discretionary spending to increase your savings contributions.
It's important to have a clear separation between the money you use for everyday transactions and your savings. That means you should keep your emergency savings (and any other type of savings) out of your checking account.
That said, your emergency funds should be easily accessible in a pinch — and ideally, earning interest while sitting in the bank. That's why a high-yield savings account is a great place to keep emergency savings; your money stays safe and grows over time, but can be withdrawn whenever you need it.
Read more: The 4 best (and worst) places to keep your emergency fund
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