Many Americans struggle with emergency savings. It’s hard to even get started, let alone to amass the three to six months of household expenses we are instructed to save. Investopedia, the financial media site, has a new report that sheds light on how much emergency savings we really need.
The good news: We now have a hard number to aim for. The bad news: It’s a large number. A typical U.
S. household should have saved for an emergency, Investopedia reports: $33,110.68, to be exact.
That sum represents roughly four times the amount of money the typical household has in its combined savings and checking accounts, a comparatively paltry $8,329, according to federal data. “That should be a wakeup call for people,” said , editor in chief of Investopedia, on the struggle to save for an emergency. “If you think savings are going to get you out of it, you have to have enough savings to get through it.
” The Investopedia team came up with the $33,000 figure by analyzing the average costs of six months of expenses for a household of at least two people. The biggest category of costs is medical care: The analysis assumes you’ve lost your job, and healthcare gets expensive when you are unemployed. Here’s the full breakdown of expenses: $10,754.
63 for medical care: The average cost of single-coverage COBRA premiums for six months, multiplied by average household size. $10,250 for cars: Average cost to own two vehicles for six months, and to operate one. $9,137.
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