Establishing an emergency fund is a pivotal step in the journey known as personal finance. Although collecting money for emergencies seems logical, there’s still a lot of confusion about how much money you should save and what kind of events you may consider an emergency. What’s more, 58% of Americans say they have less than $1,000 in their savings accounts right now. If this thought scares you, it should. There are plenty of potential emergencies that can come our way, and $1,000 doesn’t quite cut it. Here’s what you should consider when you’re building an emergency fund – the right way.

Emergency funds vary for everyone

First, forget that everyone should have a “certain amount” of money in their emergency fund. The types of emergencies you may experience are dependent on your personal lifestyle, job situation, living habits, and more. No one can define the “right” amount for each person. Although, there are some guidelines that will help you understand how much money you should set aside for unexpected expenses. The first rule of thumb for emergency funds is to save at least three to six months living expenses. This will ensure you will have enough cash to float you in the instance you lose your job or are otherwise unfit for work. Three to six months should, in most situations, give you enough time to get back on your feet and find another job. However, it should be noted that this amount is where we think you should start. Living expenses are one thing, but other unexpected expenses can even exceed three to six months worth of savings.

Expect the unexpected

Do you rent or own your home? Do you own any pets? Do you have any particular health conditions? How new is your vehicle? These are all questions you should ask yourself when beefing up your emergency fund. First, renters have an advantage over homeowners when it comes to maintenance. As a renter, you are not typically responsible for emergency repairs – such as a broken air conditioning unit or a plumbing issue – in your apartment or home. If you’re a homeowner, you’re solely responsible for these expenses and may need to pay up if emergency repairs pop up. For this reason, homeowners should have an ample emergency fund. In addition, pet owners should also consider increasing the amount of money in their emergency fund. Unfortunately, our furry friends are just as susceptible to health problems and accidents as we are. Before you’re shocked with a several thousand dollar vet bill for life-sustaining pet surgery, consider purchasing a pet insurance plan with your local vet. This will help you rest assured that your furbaby will receive the healthcare they need if an emergency happens. It’s also a good idea to beef up your emergency fund by a few thousand dollars, too, in case you have a high deductible or need to cover medications. Similarly, you’ll want to pay for your own health insurance to avoid costly medical bills for yourself. Again, having a few thousand dollars on hand in your emergency fund will be handy here, too, if you have a burdensome health condition. Finally, assess the condition of your vehicle, if you have one. Automotive repairs can range a few hundred to several thousand dollars. For this reason, having extra cash in your emergency fund is critical. Even if you have a relatively new car, accidents happen. Make sure you purchase full coverage from your car insurer and have enough cash in the emergency fund to cover any deductibles. While there’s no set amount for how much cash you should have in your emergency fund, all of these factors will help you determine what areas you need to save for.