Finally, Americans Are Bulking Up Their Emergency Funds

Finally, Americans Are Bulking Up Their Emergency Funds

More Americans are finally getting serious about keeping up an emergency fund, and they have the savings to prove it.

In fact, 31% say they have enough savings to cover six months' worth of expenses or more, according to Bankrate's June Financial Security Index survey of over 1,000 Americans.

If you're thinking that less than a third doesn't sound like much, well, you wouldn't be wrong, but it is a serious improvement: That number is up nine percentage points from just two years ago and comes in at a seven-year high.

Even more promising: Younger millennials are starting their savings early, with 23% of 18- to 26-year-olds having enough savings to cover six or more months' worth of expenses, and 27% saying they can cover three to five months. In fact, in the three-to-five month category, millennials outpaced their boomer parents, who were at 11%. (Looks like you can have your avocado toast and eat it too.)

“Millennials have a savings discipline that the preceding generations lacked,” Greg McBride, Bankrate's chief financial analyst, said to Bloomberg. “They have a greater aversion to debt, they’re not as consumption-focused and they have a greater propensity toward saving than we’ve seen in some time.”

On the flip side, there are still 24% of respondents who have zero savings to speak of and 20% with less than three months' worth of expenses squirreled away. While these numbers are lower than in previous years, it's obvious we still have work to do.

This is especially important in light of new findings out of The New School for Social Research that show 96% of Americans will experience four or more "income shocks" in their working years, defined as a 10% or greater decline in pay caused by factors like job loss, job change or illness. Without the proper savings, people are turning to their retirement funds to bail them out of these financially unstable times instead, reports Money — which in turn leaves them in a vulnerable position come retirement.

Here at LearnVest, we follow the 3-6-9 Guideline when it comes to emergency savings: stashing away either three, six or nine months' worth of expenses, depending on your personal financial circumstances, such as whether you're an unattached renter with a steady income or a freelancer with a family to feed.

Of course, the key to a healthy emergency fund starts with a budget. One of the more surprising findings of the survey revealed that lower- to middle-income households (those with a yearly income between $30,000 and $50,000) are more likely to have an adequate cushion than no savings at all. Of these households, 24% had emergency funds to cover six months' of expenses — proving it's not only about how much money you make, but what you do with it.

If you're not sure where to start, our four-week guide to setting (and sticking to) a budget will help you get the ball rolling. And check out these quick ways to boost your savings for some extra inspo. Now, get saving!

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