How Much Money Should You Save For A Rainy Day?

The most important reason Americans save money: To have something salted away for a rainy day.

When researchers asked people the most important reason they save money, building an emergency fund finished slightly ahead of retirement and way ahead of everything else.

Why Americans Save

This raises a second question: How much do you need in a rainy day fund?

Lucky for us, the researchers asked this question as well. Not surprisingly, people with higher incomes said they needed a bigger emergency fund.

But up and down the income spectrum, people said a rainy day fund should be between 9 percent and 14 percent of their annual income.

What Americans Think They Need For A Rainy Day

In other words, most people think they need a bit more than a month's worth of income saved up for a rainy day.

The findings come from a report the Federal Reserve released yesterday. For more on the report, see our post from yesterday looking at the decline in wealth for American households.

Planet Money Question of the Day: How much do you think you should have saved for a rainy day? (Also: How much do you actually have in your rainy-day fund?)

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.