Most personal finance advisors agree that emergency savings are a critical component of financial wellness. However, despite the importance of savings to financial health, there is no commonly accepted methodology to determine how much an individual or family might need in case of an emergency. Recommendations range from a few months to almost a year of take home income; but, these recommendations seem to be based on little to no data.
In this paper, Aron Szapiro proposes a new methodology for determining a personalized emergency savings target for most workers. This new methodology is based largely on HelloWallet users’ data including millions of daily transactions. In the paper Aron proposes three levels of emergency saving: minor emergency protection, major emergency protection, and job loss protection.
To get a personalized emergency savings recommendation based on our new research check out our Emergency Savings Calculator.