According to the latest report from Investopedia, by the year 2025, the average American household should have at least $35,000 in emergency savings, and this number is expected to increase over time. This amount is equivalent to six months’ worth of emergency expenses for a typical American household, which represents about two-fifths of the household’s annual income.
In March, a CNBC survey indicated a 36% possibility of the United States entering an economic recession, which is higher than the 23% reported in January. The chief economist at JPMorgan Chase believes the likelihood is around 40%.
Veronica Willis, an investment strategist at Wells Fargo Investment Institute, told USA Today that regardless of whether a recession occurs, the U.S. economy is already in a “slump.”
It is always wise to be prepared for any possible economic downturn in the future.
Many financial experts recommend that households should accumulate enough emergency savings to cover expenses for three to six months or even longer. Emergency funds are designed to protect against the impacts of unemployment, health crises, car breakdowns, or significant home repairs, making them particularly crucial during economic recessions.
Last year, Investopedia assessed six months’ worth of emergency expenses, including housing, healthcare, travel, and food, projecting a total slightly above $33,000 by 2024.
In the updated report released in May 2025, Investopedia recalculated these figures, with the total amount reaching $35,218 this time.
Caleb Silver, the editor-in-chief at Investopedia, stated, “The increase is approximately 5%, with the major factor being healthcare costs that have outpaced the inflation rate.”
The analysis factored in six months’ worth of housing, utilities, food, healthcare, and transportation expenses for a two-person household.
However, most Americans do not have $35,000 in disposable income.
According to a WalletHub survey in March, at least one-fifth of Americans do not have an emergency savings account, which is a concerning statistic, as mentioned by Odysseas Papadimitriou, the CEO of WalletHub.
“Emergency savings should be a top priority for every family, above all else,” he emphasized, warning that without it, “you run the risk of facing financial disasters.”
Silver agreed, stating, “If you don’t have an emergency savings account and you have to borrow money to cover those bills in an emergency situation, you’re going to get into a debt cycle that’s hard to break.”
Investopedia presented the six-month family expenses in a table to illustrate the significant amount needed for emergencies realistically.
“We did this to ensure that people could practically understand how much they will need to maintain their household if they lose income and healthcare,” Silver said.
Emergency savings provide peace of mind, with even small amounts of savings being better than none. A study released by Vanguard in April found that having at least $2,000 in emergency savings could improve one’s financial situation by 21%, as those without emergency funds are more likely to experience financial stress.
A $500 emergency fund may cover minor car repairs or moderate medical expenses, while a $2,000 fund can help address major car repairs or appliance replacements, and a $10,000 fund can meet more extensive family emergencies.
Here are some emergency savings tips from NerdWallet, Investopedia, and other sources:
Given the current interest rate environment, emergency savings accounts can easily achieve a 4% or higher annual return.
High-yield savings accounts are a good option, with the best rates typically coming from online banks that have lower management fees and are actively attracting customers.
Another option is a money market account, which combines the functions of a checking account and a savings account. While they may have higher deposit requirements, the interest rates are typically above 4%.
Setting up automatic deposits can help steadily build savings. Employers may allow direct deposits of a portion of the salary into an emergency savings account, or individuals can set up automatic transfers themselves.
By saving just $10 a week, you can accumulate over $500 in a year.