An emergency fund isn’t just for major disasters. It’s for life’s everyday surprises: a flat tire, an unexpected medical bill, or a layoff you didn’t see coming. And while the idea of saving up months of expenses might sound overwhelming, getting started is easier than you think.
An emergency fund stands between you and high-interest debt when things inevitably go wrong with your health, home, car, or life. As a result, having some savings tucked away can help keep that surprise expense from becoming a shockingly big one.
Here are five practical tips for getting your emergency fund off the ground, no big budget overhaul required.
Set a Realistic Goal
Yes, the gold standard for emergency funds is saving enough to cover three to six months of expenses. But that’s not where you need to begin.
An emergency fund of a few thousand dollars is a great start. That alone can cover unexpected car or home repairs, medical bills, or emergency travel. Try to build toward saving three to six months of expenses, it’s OK if it takes a while to work up to your goal.
Rather than fixating on a massive number, break it into milestones: $500, then $1,000, then a month of expenses. This makes the process feel doable and gives you quick wins to stay motivated. From there, build toward the longer-term goal of weathering a job loss or other major disruption.
Start Small and Be Consistent
You don’t need hundreds of dollars a month to build an emergency fund, you just need to begin. $50 is enough to kick off an emergency fund, consistency matters more than the amount.
Setting up an emergency fund is simple, don’t overthink it. Most high-yield savings accounts have no minimum, and you could start with as little as $50 or $100. High-yield savings will help your emergency fund grow over time.
Start with whatever you can afford, even just $10 or $25 a week. Consistent progress adds up quickly. And if you get a bonus, refund, or cash gift, consider setting aside a chunk toward your fund before spending the rest.
Automate Your Contributions
Automating your savings can help ensure you stay on track with your goals. Set up recurring transfers to a dedicated high-yield savings account so your savings can keep working for you
If possible, route part of your paycheck directly into savings via your employer’s direct deposit system. If you never see the money, you can’t spend it.
Keep Some of Your Savings in Your Name
Joint accounts make sense for many shared expenses, but your full emergency fund shouldn’t be communal.
Each partner or spouse in a relationship should have a little bit of savings in their name. If you leave a relationship, having all the funds in a joint account is risky because the joint owner has access to the money.
Having individual access to at least a portion of your savings ensures personal security in case of relationship changes, urgent needs, or any other unexpected emergency.
Find Small Ways to Boost Income
If your current budget is stretched too thin, consider small, manageable ways to earn extra cash, just enough to funnel into your savings.
This could be as simple as tutoring, pet sitting, or freelancing a skill you already have. Side income doesn’t need to be permanent or time-consuming. Even $100 per month from a few quick jobs can snowball into a $1,200 cushion by year’s end.
Try using a separate checking account just for side hustle income, and set up an automatic transfer from there into your emergency savings.
The Bottom Line
You don’t have to be wealthy to build a financial safety net. Set a small, manageable goal that you can work up to over time. Automate your savings, and direct them into a separate high-yield account where they can grow quietly in the background.
The most important part is getting started because the next emergency isn’t a question of if, but when.
MRA Advisory Group offers complimentary 1st meetings with our advisors. If you’d like to get started on a financial plan that fits your lifestyle, schedule a meeting with us today and we’ll get to work!
Advisory Services are offered through MRA Advisory Group, a Registered Investment Adviser. It is general in nature that the statements herein are not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. The investments and strategies mentioned may not be suitable for all investors. Past performance is no guarantee of future results. Nothing herein, nor any attachment, shall be considered to constitute (i) an offer to sell, nor a solicitation of an offer to purchase, any security, or (ii) tax or legal advice