Almost 4 in 10 Americans Worry About Their Emergency Funds. Here's How to Know if Yours Is Sufficient

The whole purpose of having an emergency fund is to buy yourself financial protection when life throws you a curveball. That curveball could be the loss of a job, a home repair, a car that refuses to start, or a large pile of medical bills.

In a recent CFP Board survey, 38% of respondents found the state of their emergency savings "very concerning." And that's concerning in its own right. The question is, are you all set with emergency savings? Or do you need to make padding your savings account a priority?

You need a three-month emergency fund at a minimum

When it comes to what constitutes the ideal emergency fund, everyone is different. You may feel the need to have more savings if you have several kids to support and a mortgage to cover, whereas someone else might be comfortable with a lower level of savings if they're single and rent an apartment on a month-to-month lease they can break easily.

That's why, at a minimum, you'll need to make sure your emergency fund has enough cash to cover three full months of essential expenses. Beyond that, it's really up to you as to whether you need to be saving more.

READ MORE: Emergency Fund Calculator

If you're not sure whether you have enough money in your emergency fund at present, comb through your expenses from the past 12 months and see what your essential monthly spending amounts to. It's important to do this exercise over the past 12 months, and not just over the past one or two months, because you might discover certain bills that only come up once a year or once a quarter (think property tax bills and life insurance premiums). And those are expenses your emergency fund should account for.

So, let's say you spend $3,200 a month on essential bills and you have $5,000 in savings. Well, that's not bad -- and it's far better than having no money saved. But ideally, you should be aiming for a minimum of $9,600 in that situation. If you were to find yourself out of work and ineligible for unemployment, you wouldn't even have enough money to cover your essential costs for two months.

Consider your personal comfort level

Let's say you spend $3,200 a month on essential bills and have $9,600 socked away in the bank. At that point, you've hit the three-month mark, which is great.

But you still may want to consider boosting your emergency fund beyond that point if doing so brings you more peace of mind. Three months, unfortunately, isn't a very long time to find a job when you're forced out of one. And if you get hit with a giant home repair, it could be enough to deplete your emergency fund, leaving you with no cash reserves to fall back on.

So while a three-month emergency fund is perfectly acceptable, you may want to aim beyond the bare minimum. Doing so could really make it easier to get through a financial crisis if one happens to strike.