Emergency fund: Why you should have one

When to start saving?

Now. Because your financial security can take a hit at any time and come from anywhere, the question is no longer 'Should you save for an emergency fund?' but 'How quickly and how much?'

How much is enough?

You may not be able to avoid the event that requires an emergency fund, but you can and should prepare for it.

While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, one rule of thumb is to put away at least three to six months' worth of expenses. Add up essential living expenses for one month multiply by the number of months to be prepared for, and that's a possible rainy-day fund to plan for. That total may take you by surprise but should be a goal to shoot for. If you need assistance, talk to your Huntington banker.

Expenses to keep in mind when calculating your emergency fund:

• Rent or mortgage
• Utility payments (gas, electric, water, garbage)
• Telecom payments (phone, cable, and internet)
• Insurance payments (car, health, and home)
• Transportation costs (car payment, gas, public transit)
• Debt payments (credit cards and all loans except mortgage)
• Grocery expenses
• Other monthly expenses

You can also use our Emergency Fund Calculator to help determine how much of your income should be set aside for emergencies.

Where to keep an emergency fund

After you figured out how much to line your rainy-day fund with, you'll have to decide where to keep it. It's advisable to keep some cash, as much as $200, at home for immediate access.

For the rest, liquidity is still important, but it’d be wise to deposit whatever remains of your emergency fund into a safe, but quickly accessible account. Consider a savings account connected to your checking account, a money market account that comes with a debit card or check-writing privileges that can earn interest, and use digital tools to stay on track.