savings

4 factors in opening a savings account

How much do you need to save?
How much do you need to save? © nenetus/Shutterstock.com

If a savings account is set aside for the unexpected, how do you determine how much to save?

"The larger the account, the more financially secure the family (is), though our research shows that even as little as $500 can make a big difference," Brobeck says. "One survey revealed that low-income families think they need $1,500, while moderate-income families think they need $3,000. Of course, it's desirable to save far more to help protect one in the event of (a) job loss or huge, unexpected expense."

Most financial planners recommend saving three to nine months' worth of expenses, depending on the family dynamics. For instance, if only one adult in the household is working, the family's emergency fund should hold enough to cover at least six months of expenses, "Because if there's a job loss, there's nothing else to fall back on," says Bob Gavlak, wealth adviser with Strategic Wealth Partners in Seven Hills, Ohio. For two-income households, Gavlak recommends saving a minimum of three months in expenses.

"It really just depends on your personal comfort level," Briboneria says. "Some people like to have up to 12 months of expenses saved."

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