I Just Graduated College. How Much of an Emergency Fund Is Realistic for Me?

It's pretty unsettling to hear that a good 67% of Americans don't have enough money in their savings account to cover a $400 emergency expense. That's what a recent SecureSave survey found, and it also revealed that most Americans are living paycheck to paycheck with no financial cushion.

If you've just graduated from college and are starting your first job, you should make a point to not spend your entire paycheck. You'll need to free up some cash so you can build yourself an emergency fund.

In fact, you should really aim to have enough money in your emergency fund to cover a full three months of essential bills, like your rent, auto loan payments, food, and utilities. But if you've only first just started to work and your paycheck isn't so generous, you may be wondering how much of it you can reasonably be expected to save.

The answer is, it depends on your income and bills. But you should also know that it might take time for you to build up a three-month emergency fund. And as long as you're saving something every month, you're doing pretty well.

You can only do your best

When you're in your late 20s and have five years of working experience or more under your belt, you gain more negotiating power when it comes to salary. And at that point, your paycheck might go up.

When you're a recent college graduate, you may have to come to terms with an entry-level salary. And if you're not earning very much and have a lot of bills, there may only be so much money you can save on a monthly basis.

So, let's say you bring home $2,500 every month after taxes, but your essential bills come to $2,000. That gives you $500 left over each month to spend on things like leisure, meals outside the home, streaming services, and travel.

Should you spend all of that $500 on those fun but non-essential expenses? No. But also, you shouldn't necessarily be expected to save that $500 in its entirety. That's just not realistic. So in this example, saving $150 to $200 a month is pretty reasonable, and pretty respectable.

You can try to boost your income

If the salary your job pays you doesn't allow for much opportunity to build savings, then you may want to consider boosting your income with a side hustle. Chances are, you won't be the only person in your social circle going that route. And getting a second job might make it easier to build up your emergency fund more quickly.

But even so, it might take you well over a year to complete your emergency fund, and that's really okay. As long as you're setting aside some amount of money each month, you're doing a good thing for your finances.

In our example, if you're able to bank $200 a month, you're looking at $2,400 in savings after a year. That's roughly one month of essential living costs. It's not the complete financial protection you need, but it's a start.