Most Americans don't have a ton of money in the bank. As of 2022, American families had a median of $8,000 in "transaction accounts" (checking, savings, and similar accounts), according to the Federal Reserve.

That doesn't mean they're all struggling financially. However, data shows that it's a good idea to aim to have $19,800 or more tucked away in a savings account. Here's why.

You might need $20,000 or more in an emergency

Everyone should aim to have an emergency fund that they keep in a high-yield savings account where it's easily accessible. This is a rainy-day fund that can cover unexpected expenses or a period of unemployment. Ideally, this account will have at least enough money to cover three months' worth of expenses.

The average American household spent $6,440 per month in 2023, according to the Bureau of Labor Statistics. Given that prices rose 2.9% last year, the average monthly spending is likely closer to $6,600 now.

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That means the average American family should aim to keep $19,800 or more in savings.

You could earn 10 times the national average APY with a high-yield savings account. Check out our list of the best high-yield savings accounts and start earning more interest today.

Why three months' worth of expenses?

Keeping three months' worth of spending in a savings account is common advice for good reason. First, if you lose your job, your emergency fund can keep you afloat while you get back on your feet.

Here are just some of the big expenses that might catch you by surprise:

• A medical emergency
• Car repairs
• HVAC, plumbing, and roof repairs

These kinds of things can cost you five figures. If you don't have the cash to pay for a surprise expense, then you may end up in debt. And if you have to use a credit card (likely with a 20%-plus interest rate), then it may take you months or years to pay it off. In the long term, that can be a huge financial setback.

If you're forced to rely on a credit card in an emergency, a card with a 0% intro APR can help. Check out our list of the best 0% intro APR credit cards now.

How to build your emergency savings

If you don't have enough money in the bank, don't panic -- you're far from being alone. And you might be surprised by how fast you can grow your savings by taking small steps now.

Start by combing through your bank and credit card statements and looking for any expense you can cut. Once you've dropped those expenses, take the amount of money you're saving and have it automatically deposited into a savings account. You can either change your direct deposit at work or set up automatic transfers from a checking account.

If you saved an extra $100 a month and put it in a high-yield savings account with an APY of 4.00%, then you'd have $6,618 more in the bank after five years and $14,670 after 10 years.

Increasing your income can make an even bigger difference. We can only cut our expenses so much, but there's no hard limit on how much we can earn. A side hustle or a small raise may not make you rich, but don't underestimate how big of an impact it could make.

If you earned an extra $300 a month and put it in a 4.00% APY savings account, you'd have an additional $19,854 in five years.

Not everyone needs $20,000 in the bank

$20,000 is not a one-size-fits-all number. Everyone's financial situation is different. If you're happily getting by on less money than the average American, then you probably don't need that much money stashed away.

But others may want to set aside even more than $20,000. For example, if you have health issues, if you own a home, or if your income is unpredictable, then you may need a bigger safety net than most.