# How to Use Google Sheets to Build Your Emergency Fund in 5 Steps

We live in a consumption-first society.

As a result, household debt has increased while savings has decreased.

In fact, the median savings account balance in America is only \$4,830, which is sufficient to cover only 1 month of the average American’s expenses.

Sadly, securing a high income doesn’t seem to make a difference as 25% of households earning over \$150,000 live paycheck-to-paycheck.

Even living an average lifestyle can put you at risk if you don’t have an emergency fund to shield you from life’s inevitable curveballs.

How much should you have in your emergency fund?

To protect yourself and your family from unforeseen financial hardship, Vanguard recommends having at least 3 to 6 months of living expenses in savings.

Depending on your financial situation, it may be safer to have an entire year of living expenses on hand.

## How to build your emergency fund in Google Sheets in 5 Steps

Building an emergency fund that is unique to your financial situation can be done easily in Google Sheets.

### 1 – Gather your financial data.

If you already track your budget in a spreadsheet, this step will take no time at all. If you use an app or other software, there may be an option to download your spending history in a CSV file that can then be converted to a Google Sheet.

### 2 – Calculate your monthly expenses.

Ideally, you should analyze spending over a full year, so you can capture irregular expenses, such as birthday and holiday gifts, car maintenance, and back to school shopping.

### 3 – Calculate your average monthly expenses.

Once you’ve analyzed your spending, use the AVERAGE formula to find your average spending each month:

=AVERAGE(value_1,value_2,value_3…)

In the example spreadsheet above, we’re averaging columns B, C, etc with row 10:

=AVERAGE(B10:M10)

### 4 – Calculate recommended savings totals, and decide how much risk you can reasonably afford.

If you’re confident that an unforeseen hardship would have a negligible effect on your savings, then 3 months of savings might be sufficient.

However, if you have children, have health issues, would have a difficult time replacing your income in the event of job loss, or are just risk averse, 9 months to a year of savings might make you more comfortable.

The most important consideration is your peace of mind.

### 5 – Automate your savings and pay yourself first.

After you’ve established your emergency fund goal, decide how much you can save each month and set up an automatic transfer from your checking to your savings account.

You are far more likely to continue contributing to your savings if you don’t have to remember to do so.

You are far more likely to continue contributing to your savings if you don’t have to remember to do so.

Regardless of the amount of money you choose to save in your emergency fund, it’s prudent to keep this money in a liquid account, such as a savings account.

Investments such as certificates of deposit or stocks can incur taxes or penalties at withdrawal, and they aren’t as readily accessible in a financial bind.