Putting aside at least $400 in savings has long been recommended as an initial savings goal by personal finance experts. That’s because for years $400 has been a benchmark emergency expense used in the Federal Reserve’s annual survey of household economics. 

However, that amount “hasn’t kept pace with the reality of how much these emergency expenses cost,” says Anuj Nayar, financial health officer at LendingClub.

The average cost of an unexpected expense has grown to approximately $1,400, according to a new survey from financial services company LendingClub and financial news site PYMNTS. 

For that reason, aiming for a minimum of $1,400 in emergency savings is likely a more useful starting goal than $400, says Nayar. From there, financial planners typically recommend saving up enough to cover three to six months worth of expenses.

Emergency savings are important because when unexpected expenses arise, many people who lack short-term cash end up relying on high-interest credit cards that can make their debt worse, Nayar says. 

When emergency expenses came up for survey respondents, 48% used credit cards or other financing, like borrowing money from family members, selling possessions or payday loans. Of those using a credit card, 18% carried a balance beyond their next payment’s due date.

And these expenses are all but guaranteed to arise at one point or another. About half of respondents reported one or more emergency expenses in the three months preceding the survey, which was based on 4,006 census-balanced respondents.

“Pretty much all of us will have an unexpected expense in the next six months,” Nayar says. “And you usually don’t have a choice about it — you just have to find a way to pay for it, right away.” 

However, since so many Americans struggle to save, “any cushion of savings” is better than no cushion at all, says Nayar. Start with whatever you can.

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