Yes, you need an emergency fund

Financial planner suggests saving enough to cover essential expenses for 3 to 6 months

SAN ANTONIO – It’s not if, but when, you’ll have a money emergency like a big home repair, medical bill or maybe even lose your job. Having an emergency fund can help smooth out life’s financial hits, which may be more painful with today’s inflation.

“Having a rainy day fund to cover these types of unplanned expenses can protect you from major debt, which can easily turn into a financial crisis,” said Consumer Reports’ Lisa Gill.

Many financial planners say that putting aside enough to cover three to six months of essential expenses is a good rule.

“That’s for housing, food, transportation, and debt repayment,” said financial planner Nestor Vargas. “So figure out how much that is on a monthly basis, then multiply it by up to six to come up with the amount you should save for your emergency fund.”

If your income is inconsistent or you’re retired, experts suggest leaning toward six months.

Once you determine your savings target, don’t let that number scare you.

“It’s definitely important to start saving as much as you can. Even if it’s $5 or $10 a month, you’ll be surprised by how quickly that adds up,” Vargas said.

An online savings calculator such as can show how much you’ll need to set aside each month to reach your goal, and how quickly that money will grow.

Consumer Reports suggests putting the money into a high-yield savings bank or no-penalty certificate of deposit. Many of those accounts now have interest rates of over 4%.

You can make saving easier by setting automatic deposits or transfers from your checking account to your emergency fund. It will keep your contributions on track and secure until you need them.

If you have other urgent financial obligations, such as high-interest credit card debt, Consumer Reports says paying down that debt should become priority. If you have low-interest debt, you could strike a balance, funneling some of your savings toward paying it, with the rest going toward your emergency fund. For more on paying off credit card debt, go to

About the Author:

As a consumer reporter, Marilyn is all about helping people stay safe and save a buck. Since coming to KSAT in 1985, she’s covered everything from crime to politics, winning awards for her coverage of the Mexican Mafia, Oklahoma tornadoes, children’s transplants, an investigation into voting irregularities and even a hit-and-run Santa Claus.