I Have a $20,000 Emergency Fund. Am I All Set?

Last year, SecureSave reported that 63% of Americans did not have enough money in a savings account to cover an unplanned $500 emergency expense. So if you're sitting on a $20,000 emergency fund, you're clearly in a much more solid place.

But believe it or not, just because you have $20,000 to your name doesn't mean your emergency fund is automatically complete. Perhaps you still have work to do on the savings front.

It's a matter of your personal expenses

There are two purposes to having an emergency fund -- to give you money to access when unplanned bills pop up, and to get you through a period of unemployment. It's for the latter reason especially that workers are generally advised to save enough in an emergency fund to cover three to six months of essential expenses. The logic is that it might take that long to find a job after losing one, so having that level of savings could make it possible to avoid credit card debt while unemployed.

Now whether you opt to aim for a three-month emergency fund or a six-month fund (or more) will depend on your personal circumstances and how much financial peace of mind you require. But three months' worth of bills in savings should really be your minimum goal.

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With that in mind, whether you're all set with a $20,000 emergency fund will really depend on what your monthly expenses look like. If your essential bills come to $6,667 a month or less, then you may be well-protected with $20,000 in the bank.

But if you're a higher earner who spends $8,000 a month on essential expenses, then your minimum emergency fund target should really be $24,000. And if your monthly spending comes to $10,000, then you should really be aiming for $30,000 in your emergency fund.

RELATED: Emergency Fund Calculator

Higher earners might want more

If you're a higher earner, you may want to amass enough savings to cover six months' worth of expenses instead of just three. Why so? Upper-level jobs that are lost can sometimes be harder to replace than lower- or mid-level jobs, since there tend to be fewer of them.

Imagine you're an IT professional on a team of 20 earning $80,000 a year. If you were to get laid off, chances are, you'd find a comparable job with a similar salary in a few months' time. But if you're the VP of Technology at your company and you earn $240,000 a year, there may not be as many openings for that same role at different firms. So for that reason, when you're a higher-paid professional in more of a specialty role, it often pays to have extra savings, just in case.

Focus on your expenses, not just a single number

For some people, a $1 million nest egg could make for a very comfortable retirement. For others, a sum of that nature might fall short.

Similarly, for many working Americans, a $20,000 emergency fund will indeed be more than adequate. But if you're a higher earner with large bills, you may be an exception to that rule.

So rather than focus on a single number in the context of planning out your emergency fund, instead, run the numbers to see what you actually spend on a monthly basis. And then figure out how many months of income it pays for you to replace.