An emergency fund can protect a household from a job loss, major repair, medical bill, or other financial shock. But there comes a point when piling more money into that account stops solving an emergency problem and starts creating a different money decision.
There is no universal dollar amount that makes an emergency fund “too big.” Fidelity currently suggests building toward three to six months of essential expenses, while Vanguard also uses three to six months as a general benchmark. Both also note that circumstances can justify a larger cushion.
