This Is the Median Amount of Emergency Savings Workers Have -- and Why It's Probably Not Enough

Is your emergency fund adequate, or is it looking sluggish?

You never know when an unexpected expense might come your way, whether it's needing to fix your car so you can actually get it out of your driveway or having to cover a surprise ER bill for an accident your child sustained during a regular weekend sports matchup. That's why it's so important to have money in your savings account for these types of bills -- large unanticipated expenses.

You also never know when things might go south at your place of work, leading to layoffs. A solid emergency fund could be just the thing to get you through an extended period of unemployment.

But in a recent Transamerica survey, as of late 2021, the median emergency savings amount recorded was a mere $5,000. And 34% of those surveyed said they have less than $5,000 in savings for emergency expenses.

If your emergency fund needs work, boosting it should be your top priority. And now's an especially important time to give your emergency savings your full attention.

Do you have enough cash saved for emergencies?

Is a $5,000 emergency fund enough? For some people, maybe. But your emergency fund should contain enough money to cover a full three months' worth of essential bills. And in a more ideal world, you'd have enough cash in the bank to pay for six months of essential expenses.

Now, let's say you live very frugally and only spend about $1,700 a month on essentials. In that case, you're certainly in decent shape if you have a $5,000 emergency fund. But if you tend to spend $3,500 on essentials each month, then a $5,000 emergency fund just won't cut it.

To be clear, any amount of savings you have is a positive thing. Even as little as $500 in the bank buys you some protection. But if your savings won't suffice in paying for three full months of essential bills, then it's time to focus on giving them a boost.

How to grow your emergency fund

For months on end, financial experts have been sounding warnings about a 2023 recession. Remember, a downturn isn't guaranteed to happen this year. But it's still a possibility everyone should prepare for. And if your emergency fund lacks money, you'll want to address that issue before economic conditions worsen.

One good way to grow your emergency fund is to get yourself a side hustle. Sure, you could pledge to cut back on spending, too. But unless you're willing to make big changes, working a second job is probably the fastest way to bump up your savings balance by several thousand dollars.

That said, if you're really sitting on little to no money in savings, making a short-term but drastic change to your lifestyle could help you build up cash reserves. Giving up your apartment when your lease runs out and moving back home for six months, for example, could give you a solid opportunity to bank some serious cash.

It's good to see that workers are saving for emergencies. But many people with $5,000 in the bank or less may not be adequately protected. If that's the boat you're in, the sooner you push yourself to grow your cash reserves, the more peace of mind you might enjoy -- especially if economic conditions worsen this year.