You Need an Emergency Fund! Here’s How to Start One Today

Most people know they need to save money for emergencies, but many don’t have a solid plan to make that happen.

Here are the steps to save money for an emergency fund and break down some of the best tips to stick to your budget. By following our advice, you’ll be able to rest easy knowing that you have a cushion in case of unexpected expenses.

What Is An Emergency Fund?

An emergency fund is a savings account that you use to cover unexpected costs. Having one is essential because it can help you avoid going into debt if something unexpected happens.

Some of the unexpected events that you might want to use an emergency fund for:

  • Job loss
  • Medical expenses
  • Unexpected death
  • Unplanned auto repair
  • Urgent home repair

Why Do You Need An Emergency Fund?

There are few things worse than getting into financial trouble, primarily if your family’s well-being depends on it. The last thing you need when trying to get back onto solid ground is an even deeper debt hole.

Emergency funds create a buffer that can keep you afloat without using credit cards or high-interest loans. You’ll never again find yourself taking on new financial burdens just so there is enough money for groceries or housing payments.

It’s no secret that having an emergency fund is one of the smartest things you can do for your finances. By setting aside money each month, you’ll prepare for any unexpected expenses that come your way. An emergency fund can help you avoid going into debt if you have a financial setback, and it can give you peace of mind knowing that you have a cushion in place.

How Much Should You Save?

The general rule of thumb is to save enough money to cover three to six months of living expenses. However, the amount you’ll need to save will depend on your circumstances.

For example, you’ll likely need more than someone single if you have a family. And if you’re the sole breadwinner in your household, you’ll need to have enough saved to cover your family’s expenses for an extended time.

You may also want to consider saving more if you have high-interest debt, such as credit card debt. In this case, you may want to save enough to cover your living expenses and make a dent in your debt.




The bottom line is that you should save as much as you can reasonably afford and ensure that the money you have set aside is easily accessible in an emergency.

That may seem like a lot, but it’s essential to have a cushion in case of job loss or other unforeseen circumstances.

Related: Free Career & Job Searching Resource Library

Where Should You Keep Your Emergency Fund?

An emergency fund should be kept in a separate savings account from your regular checking account. That will help you to avoid the temptation to spend money on unnecessary things.

You may also want to consider opening a high-yield savings account, which will earn you more interest on your money.

Whatever account you choose, make sure that it is easy to access so that you can quickly withdraw the money if needed.

How Do You Save Money For An Emergency Fund?

1. Decide How Much You Need To Save

The first step in saving for an emergency fund is determining how much money you’ll need to cover unexpected expenses. That will vary depending on your circumstances, but a good rule of thumb is to have three to six months’ worth of living expenses saved.

If you have a family or rely on a single income, you may want to err on the side of caution and aim for the higher end of that range. Once you know how much you need to save, you can start working towards your goal.

You may find that your family needs $10,000 for your comfort and spending. That number may be overwhelming, but finding ways to break it down into more manageable amounts will help.

2. Set Up A Monthly Budget

If you don’t already have a budget in place, now is the time to create one. A budget will help track your spending and ensure you’re putting enough money towards monthly savings. 




Consider sinking funds for car repairs and home maintenance to lower the chances you might need your emergency fund.

There are several different ways to approach budgeting when you’re wondering what percentage of your money should go to bills, fun, and savings.  One of the simplest is the 50/30/20 rule. This rule dictates that 50% of your income should go towards essentials like housing and food, 30% should be for discretionary spending, and you should save 20%.

3. Automate Your Savings

Automating the process is one of the best ways to ensure you’re saving enough money. Many banks offer the option to set up automatic transfers from your checking account to your savings account. Pay yourself first, so you don’t even miss it.

You can schedule these transfers weekly or monthly, choosing how much money you want to transfer. Automating your spending is a great way to ensure that you’re consistently putting money away for your emergency fund without thinking about it.

4. Find Extra Money

If you’re struggling to save as much as you’d like, there may be some room in your budget to cut back on spending. Take a close look at your discretionary spending and see if there are any areas where you can cut back.

For example, you may be able to reduce your monthly entertainment budget by cutting back on cable or eating out less often. If you can find extra money in your budget, you can put that towards your emergency fund and speed up the savings process.

5. Invest In Yourself

In addition to saving money, investing in yourself is essential. One of the best ways to do this is to focus on building your income.

If you can find ways to bring in more money, you’ll have more to put towards your emergency fund. That may mean getting a better-paying job or finding side hustles that generate extra income.

Related: 300+ New Side Hustle and Small Business Ideas

6. Live Frugally

Getting your finances to build savings is a process, but you can do it. Find the holes in your spending and learn better money management. Spend money intentionally and only purchase needs, not wants.




Cutting out on cable and gym memberships can save you a lot of money. Repurposing items you already have in your home instead of buying new ones will help you reach your goal faster. Spend less money on hobbies like reading by utilizing the library and stock up on things that are on sale to add to your pantry and freezer

Tips for Sticking To Your Goal

Saving for an emergency fund can be challenging, but there are a few things you can do to make it easier to reach your financial goals.

Pay Off Debt

Being out of debt with no credit card balances or student loans will help in an emergency. Debts will only increase the amount you must save each paycheck and will take longer to reach your savings goal.

Make A Plan

Once you have a goal in mind, it’s time to make a plan. Figure out how much you need to save each month to reach your goal, and then create a budget that will allow you to do that. Start saving right away. Even if you can only save $5 a week, this also includes a meal plan, so you don’t eat out. Plan your meals before you head to the grocery store. Cook at home, find new lunch ideas for work and take your lunch, and eat leftovers rather than takeout or meals in restaurants.

Find Ways To Save Money

There are several different ways to save money, so it’s important to find the ones that work best for you. Consider earning extra cash with cash-back apps like Ibotta and Rakuten (formally known as Ebates). Save on utilities by turning off lights you’re not using, and change lightbulbs for more energy-efficient ones. 

Consider pausing investing and retirement savings short-term until your emergency fund is partially funded.  

Related: 10 Ways to Easily Save Thousands (Each In Under 30 Minutes)

Stay Disciplined

Saving for an emergency fund can be difficult, but staying disciplined is crucial. Once you’ve started putting money away, resist the temptation to spend it on other things.

Celebrate Your Progress

As you progress towards your goal, take the time to celebrate your accomplishments. That will help keep you motivated and on track.

Final Thoughts On How To Save Money For An Emergency Fund

Saving for an emergency fund is one of the most brilliant things you can do for your finances. Once your emergency fund is in place, you’ll likely feel a sense of financial bliss. 

Knowing that you have a cushion in case of unexpected expenses can help you sleep better at night and feel more confident in your ability to handle a financial setback.  

Saving money for an emergency fund can be challenging, but staying disciplined and motivated is essential. By following these tips, you can ensure that you’re prepared for anything.

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This article originally appeared on Finance Quick Fix

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Sara Conklin

Sara Conklin is a Certified Financial Coach, wife, mama, Grammie, and founder of Frozen Pennies, a site that she started after a year-long spending freeze.  She’s passionate about frugal living, budgeting, and helping others.  She writes about ways to save money, get out of debt, and intentional spending.  When Sara is not working on the business, you can find her reading, drinking coffee, and spending time with her family.





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