Get Your Emergency Fund In Place Now

by Ron Haynes

EmergencyAn emergency fund exists to help you and me handle those unexpected expenses that always seem to pop up at the worst possible time. It’s a rainy day fund and since the average person will experience a major life event in any given 10 year period, having an emergency fund in place to handle those unexpected expenses makes a great deal of sense. What things can be covered by an emergency fund?

  • The car breaks down
  • You lose your job
  • An unexpected medical bill pops up
  • The air conditioner goes out
  • Your best friend wants you to attend her (surprise!) wedding out of state
  • Your home floods

For the purposes of this discussion, an “emergency” is anything that is an unexpected, unplanned event. A vacation in the Bahamas doesn’t qualify as an emergency, neither does needing new tires for your car. Both of those should be “planned for” expenses. A  leaking gas furnace in winter IS an emergency (in more ways than one) as is a devastating tornado ripping through your home.

In the past, you may have relied on a home equity line of credit, credit cards, or family loans for unplanned expenses or emergencies. Those options can have negative side effects – I know, I’ve used all three. Using home equity puts you in more debt (at least until you sell your home). If you use credit cards, you’re committing future earnings to current spending, and family loans can make that Thanksgiving turkey taste a little gamey. Since debt isn’t a desirable financial solution, having a properly funded emergency fund will let you to use your own savings to meet those financial challenges.

How much should be in my emergency fund?

In the beginning, work to get something – anything – into savings. Just having $500 to $1,000 in a liquid emergency fund will allow you to know that you don’t have to depend on debt or family to handle the unexpected. That peace of mind is a great relief.

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The general rule of thumb is to save three to six months of living expenses in a liquid, easily accessible savings account – eight to twelve months of living expenses if you’re self-employed or the sole breadwinner. The key is to have a system of automatic savings to replenish your emergency fund in case you’re forced to dip into it. Although three to six months is the ideal cushion, it’s going to take quite some time to get to that level.

How do I fund my emergency fund?

Try using one of the 17 Sneaky Savings Strategies. There are many ways to trick yourself into saving money, which one or ones you employ is up to you. Having a yard sale is a great way to generate that extra cash.

A second job could be another option or you could ask for a raise and bank all of it (after taxes) into your emergency fund. Using one of the 26 ways to make extra money to capitalize your emergency fund could help you get to that three to six month level as well.

The biggest obstacle to saving is not being in the habit of saving, so take steps to pay yourself first. Set up direct deposit from your paycheck to a savings account, an interest bearing checking account, or a money market account. This accomplishes two things:

  1. You fund your emergency fund
  2. You’re forced to live on less than you make

Where you park the money is up to you. Whether you keep it in an interest bearing checking account so you can just write a check when an emergency bill comes due or move the money to a higher yield account (such as a 30 day CD) for the interim, using self discipline you have inside yourself to set that money aside so it’s there when you need it is critical.

If you don’t have an emergency fund in place, or if your emergency fund is weakened, get back on track and get your emergency fund fully capitalized now!

photo credit: acme

About the author

Ron Haynes has written 1000 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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Baker @ ManVsDebt

Great read! For us an emergency fund seemed like an impossible task until we really got passionate about debt-reduction. Once we came down with the “fever” our emergency fund amassed much quicker than we had planned.

Momentum played a huge role in the building of our emergency fund and is a tool I think people can tap into!

Keep up the great work!


I couldn’t have made it without an emergency fund. I guess I am not average if a fund is only used on average every 10 years. I have used it for 2 items on your list of possible emergency expenses just in the last couple of years.

Tammy Brackett

As a self employed gal with a non stable income stream, I am passionate about saving. Sometimes I think I am too passionate, leaving myself feeling “poor”! I’m steadily building a great emergency fund and am half way to my goal of $10K. I save dribs and drabs as my grandma would say. $10 here, $25 there, sell plants and make $30 and sock it away! I’m always using some sort of side hustle strategy to not only save more but make more!
Great post. Especially for TAX THIRTY!


An emergency fund is very practical for all the reasons that you have pointed out. In addition, it adds value to your life. It allows you to relax a bit because you know you have a safety net should anything happen. It can also give you the courage to step out of your comfort zone and try something new!

Thanks for linking to my article about how I lost my home in a tornado! A situation where my emergency fund was especially useful.


You’re right, it is nice to have padding and I’ve done that, but seems in this day and age we can’t even fully depend upon our possessions and wealth to get by…the dollar could turn on its head, there are wars and rumors or wars, etc. This shaking and uncertainty of jobs, weather disaster, and looming troubles cause us to look past what this world has to offer. I used to sing an old hymn with the chorus–on Christ the solid rock I stand all other ground is sinking sand, all other ground is sinking sand.


@ Baker – Having less debt to deal with certainly does make saving easier — but that was your point, wasn’t it? :D

@ Student – maybe you won’t need it for another 20 years? We can always hope, but at least you’re moving forward with your eyes wide open!

@ Tammy – feeling poor and being poor are two different things, no? Great job on working towards your goals. I love stories like yours!

@ Jeff – I sincerely hope you never have to go through that again, but I’m grateful that you were willing to share your story.

@ Servant – I agree. My biggest comfort doesn’t come from material possessions, but from knowing where my true citizenship lies. Still, I consider the ant, who lays up stores for the winter …


I dont know what I would do without an emergency fund. My disability leave was just extended from late April to mid July and who knows if 1. I can go back to work then and 2. if my job would even be there (at-will state and FMLA would have run out).

dustin |

A well-funded emergency fund helps us save money in other areas as well. We always pay cash for our cars, so I save by not financing. And more importantly, we buy high-deductible, low-premium insurance which saves us an incredible amount of money because we can afford the high-deductible.

Here’s to saving!

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