Here’s the top predictor of financial well-being, according to new research

It doesn’t take $1 million to achieve the top predictor of financial well-being, according to new research from investment firm Vanguard. Instead, it’s something far more attainable: Socking away at least $2,000 in an emergency savings account. 

A survey of more than 12,000 Vanguard investors found that it’s not assets or income that is most associated with a higher level of financial well-being, but rather $2,000 worth of emergency savings. Having that $2,000 in savings increased financial well-being by 21%, while an income of $500,000 increased well-being by 12%, and assets of $1 million or more boosted well-being by 18%.

A sense of financial well-being signifies that an adult can fully meet their financial obligations and are secure in their financial future, allowing them to make choices to enjoy their life, according to the Consumer Financial Protection Bureau. 

The findings come as many Americans are feeling more financially stressed, with a separate study from Primerica finding that about half of middle-class households expect to be worse off financially in 2026, almost double the share in December, due to worries about the cost of living and the economy. Taking small steps to build an emergency savings account could prove to help alleviate financial anxiety, noted Paulo Costa, a behavioral economist and certified financial planner at Vanguard who co-authored the research. 

“What’s so powerful about this research is that it’s not about gathering a lot of money to have that peace of mind,” Costa told CBS MoneyWatch. “That initial $2,000 makes a big difference.”

While it may seem that having $1 million in assets should boost financial well-being more than $2,000 in a savings account, the results show the importance of being prepared for an unplanned expense, Costa added. (To be sure, most people in the study had $2,000 in emergency savings — about 8 in 10 — versus $1 million in assets, at about 3 in 10.)

The median cost of an emergency is about $2,000, which means having that cash on hand gives people the confidence that they can handle a sudden money stressor, he said.

“When is $2,000 more than a million dollars? It’s when it comes to emergency savings,” Costa said. “The point of emergency savings is to have that money readily available if you need it. A lot of people have money, for example, in retirement accounts that may have some requirements about when you can withdraw that money and may have some tax consequences and some penalties.”

Retirement assets are generally not readily available to cover unexpected expenses, with people younger than 59 1/2 incurring a 10% penalty for taking out money. But having $2,000 set aside in a bank account means that you’ve got the peace of mind that you’ll be able to handle a surprise car repair or medical bill.

And people with $2,000 in emergency savings typically spend about 2 hours less each week thinking about their finances versus those without any savings, the study found.

How many people can handle emergency expenses?

To be sure, obtaining $2,000 in savings could prove out of reach for many Americans, especially those who are low income, struggling with debt or who reside in an area with a high cost of living. Vanguard’s survey includes only people who have investment accounts at the company, which signals they have access to 401(k)s and other types of investment accounts that many Americans lack. 

Almost 4 in 10 Americans say they don’t have the cash on hand to pay for a $400 emergency expense, according to research from the Federal Reserve. 

Still, more Americans appear to be socking away money for a rainy day, with the Primerica study finding that 64% of those surveyed in March said they had an emergency fund of at least $1,000, up from 58% two years earlier. 

Even if saving $2,000 seems out of reach, you can start small by saving as little as $10 a week, Costa said. The best idea is to find a strategy that works for you, whether that’s budgeting or automating savings by directing a certain amount into a dedicated account with each paycheck, he said.

“I love the idea of, ‘out of sight, out of mind,’ so when you get paid, you immediately send money to your savings account,” he said. “By saving $50 per week, you will build up to $2,000 in less than a year.”

He added, “Saving something is better than saving nothing. So just getting started, that really makes a big difference.”