If life has taught us anything, it's that surprises happen. Surprises like car repairs, medical bills, and job changes, just to name a few. Without a financial cushion, those surprises can turn into stressful situations. That's where an emergency fund comes in. But, fear not, an emergency fund is not about saving thousands of dollars overnight; it's about building a safety net, one step at a time. And yes, you can start even when money feels tight.

 

Step 1: Set a realistic first goal

If the recommended 3 months of expenses feels impossible, don't panic!

• Start with $500 or $1000, as your first milestone
• Once you hit that goal, you can keep building toward 1-3 months of living costs
• Think of it as layer of security. You are adding a layer of protection, bit by bit.

 

Step 2: Make it separate & easy to access

Your emergency fund should be:

• Separate from your checking account, so you aren't tempted to spend it
• In a high-yield savings account or money market account (as 2 suggestions). DO NOT put it in the stock market or in a retirement account.
• Accessible without penalties

 

Step 3: Pay yourself first

Treat your emergency fund like a bill you can't skip.

• Even $10 or $20 a week adds up over time
• Automate transfers from your checking to savings, every payday
• If you get extra income such as tax refunds, bonuses, or a gift, put part of it straight into your emergency fund

 

Step 4: Find "hidden" money in your budget

You might already have more wiggle room than you think. Every $5-$50 can move you closer to your goal. Try:

• Canceling unused subscriptions
• Packing lunch instead of eating out once a week
• Switching to a lower-cost phone or internet plan
• Selling items that you no longer need

 

Step 5: Use it only for real emergencies

Define what you will use your emergency fund for, so that you are not tempted. It's not for holidays, new gadgets, or because you really want something. Some ideas are:

• Job loss or income drop
• Urgent car or home repairs
• Medical or dental emergencies
• Unexpected necessary travel

 

Step 6: Rebuild after you use it

If you have to dip into your emergency fund, that's okay. That is what it is there for! Just make a plan to start replenishing it right away.

 

Need more help?

Building an emergency isn't about how much you make, it's about making it a priority. Even if you start with pocking change, you are creating a safety net that will protect your peace of mind. 

 

At Walters Financial Wellness, I help clients find practical ways to save, without feeling deprived. As a result, my clients are able to breathe easier when life throws them curveballs. If you want that same freedom, make an appointment today!