building an emergency fund

budgeting & beyond

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what's in this lesson?

An emergency fund is your go-to when life throws unexpected expenses at you. In this lesson we’ll be going over why having an emergency fund is important, how much you should save for your emergency fund and the best ways to start building an emergency fund.

building an emergency fund

budgeting & beyond

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  • Overview
  • Transcript
  • Resources

building an emergency fund

budgeting & beyond

An emergency fund is your go-to when life throws unexpected expenses at you. In this lesson we’ll be going over why having an emergency fund is important, how much you should save for your emergency fund and the best ways to start building an emergency fund.

Let’s face it: life happens. And oftentimes it happens like this: just when you think you’ve got your finances all worked out, you’re enjoying life, saving money and then *BAM* you’ve got a $500+ bill you need to pay. That’s what your emergency fund is for — the not-so-fun life events that feel like a financial setback.

 

Maybe someone hits your parked car in a public parking lot (or at least that’s what you told insurance), your laptop breaks and you need a replacement, your part-time job doesn’t need your help anymore so you’ve lost some income — you get the picture.

 

And wanna know something crazy? 40% of Americans said they couldn’t cover a $400 emergency. We’re here to help lower that number and make sure you’re a part of the percentage that CAN cover any crazy life events thrown your way.

 

Even though unexpected expenses are possibly one of the least-fun things on planet earth, having an emergency fund set up makes the whole experience feel a lot less terrible because you’re prepared.

 

So what exactly is an emergency fund for?

 

  • medical issues
  • losing your job
  • unexpected travel
  • orrrrr events like a global panini (a.k.a pandemic)

 

What is an emergency fund NOT for?

 

  • planned purchases (ex: saving for college, saving for a new car or house, etc.)

 

And while you’re thinking about all of this emergency fund stuff, it’s important to know that your emergency fund does NOT have to be huge right away. The important thing is to simply start building an emergency fund as soon as you can.

 

It’s recommended to build up your personal emergency fund to cover at least 3-8 months of your *normal* life. Basically, you want to have enough in there to cover the expenses you’d have if you were living your life as close to normal as possible.

 

Here are a few simple steps to help you set up an emergency fund:

 

  • Step 1: Set up a savings account with a high APY (annual percentage yield) and make sure it’s easy to access. A high APY savings account can help your money earn money!
  • Step 2: Calculate your personal living expenses for the amount of time you think your emergency fund should cover. This’ll help you have a goal in mind so that you’re not just adding to this fund indefinitely.
  • Step 3: Dedicate a comfortable amount of income to your emergency fund each month until you reach your goal. Pro tip: set up this monthly amount as an automatic transfer into your savings account so you don’t even have to think about it!

 

While we hope you never have to use your emergency fund… it’s important to have. Your emergency fund will give you peace of mind, comfort and just a little bit of certainty in this crazy life — which is pretty hard to come by!

 

 

 

what's in this lesson?

An emergency fund is your go-to when life throws unexpected expenses at you. In this lesson we’ll be going over why having an emergency fund is important, how much you should save for your emergency fund and the best ways to start building an emergency fund.

Transcript

Let’s face it: life happens. And oftentimes it happens like this: just when you think you’ve got your finances all worked out, you’re enjoying life, saving money and then *BAM* you’ve got a $500+ bill you need to pay. That’s what your emergency fund is for — the not-so-fun life events that feel like a financial setback.

 

Maybe someone hits your parked car in a public parking lot (or at least that’s what you told insurance), your laptop breaks and you need a replacement, your part-time job doesn’t need your help anymore so you’ve lost some income — you get the picture.

 

And wanna know something crazy? 40% of Americans said they couldn’t cover a $400 emergency. We’re here to help lower that number and make sure you’re a part of the percentage that CAN cover any crazy life events thrown your way.

 

Even though unexpected expenses are possibly one of the least-fun things on planet earth, having an emergency fund set up makes the whole experience feel a lot less terrible because you’re prepared.

 

So what exactly is an emergency fund for?

 

  • medical issues
  • losing your job
  • unexpected travel
  • orrrrr events like a global panini (a.k.a pandemic)

 

What is an emergency fund NOT for?

 

  • planned purchases (ex: saving for college, saving for a new car or house, etc.)

 

And while you’re thinking about all of this emergency fund stuff, it’s important to know that your emergency fund does NOT have to be huge right away. The important thing is to simply start building an emergency fund as soon as you can.

 

It’s recommended to build up your personal emergency fund to cover at least 3-8 months of your *normal* life. Basically, you want to have enough in there to cover the expenses you’d have if you were living your life as close to normal as possible.

 

Here are a few simple steps to help you set up an emergency fund:

 

  • Step 1: Set up a savings account with a high APY (annual percentage yield) and make sure it’s easy to access. A high APY savings account can help your money earn money!
  • Step 2: Calculate your personal living expenses for the amount of time you think your emergency fund should cover. This’ll help you have a goal in mind so that you’re not just adding to this fund indefinitely.
  • Step 3: Dedicate a comfortable amount of income to your emergency fund each month until you reach your goal. Pro tip: set up this monthly amount as an automatic transfer into your savings account so you don’t even have to think about it!

 

While we hope you never have to use your emergency fund… it’s important to have. Your emergency fund will give you peace of mind, comfort and just a little bit of certainty in this crazy life — which is pretty hard to come by!

 

 

 

Additional Resources

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