Building An Emergency Fund: One Step at a Time

Unexpected costs always seem to pop up at the worst times. You finally break down and buy those new shoes you’ve had your eye on, and just as you’re admiring them, your car starts making a funny noise. You turn up the radio hoping it’ll magically fix itself (if you can’t hear it, it can’t be that bad, right?), but deep down you know it’s time to get it checked out.

A few days and a mechanic’s bill later, your new shoes don’t feel quite as exciting. Getting the money together to cover that surprise expense can be stressful, but it doesn’t have to throw you completely off track. That’s where an emergency fund can make all the difference.

Before we talk about how to build one, let’s take a step back. Because here’s the thing: before you can plan how to save, you have to decide what you’re saving for. In other words, what actually qualifies as an emergency?

A lot of people start strong with an emergency fund but end up dipping into it for things that don’t really count. It’s not that they mean to, it’s just that life and temptation have a way of testing your willpower. Let’s look at two examples.

In the first one, you’ve set aside $25 from your paycheck for your emergency fund. Things are going well, until a friend invites you to a birthday party. You’ve got enough left over to buy a nice gift, but for just $25 more, you could get that extra special something that will definitely make you the star gift-giver of the night! Birthdays only come once a year, right? You give in, promise yourself you’ll make up for it on the next paycheck, and move on.

Now, let’s say you take a difference route. You’ve still been putting aside $25 each paycheck, and a few months later, your kids accidentally send a baseball through the living room window. The repair costs a few hundred dollars, not exactly pocket change, but because you’ve been steadily saving, you’ve got enough tucked away to handle it without breaking a sweat.

In the first example, that “special” birthday gift felt urgent in the moment, but it wasn’t really an emergency. The broken window, though? Definitely qualifies. Emergencies are the things that have to be fixed or dealt with right away, usually for a cost that’s beyond what your regular paycheck comfortably covers. Once you’ve defined what’s an emergency (and what’s not), you’ve laid the groundwork for the next step: actually building your fund.

The amount you set aside is completely up to you and what your budget allows. A good starting goal is to save 10-15% of your monthly income if you can. But if that’s a stretch, even a small amount adds up faster than you think. The key is consistency, slow and steady wins the race.

Over time, aim to build enough to cover 3-6 months of essential expenses, like housing, food, utilities, and transportation. That cushion gives you peace of mind when life decides to throw a curveball (or a baseball) your way.

When you get a raise, bonus, or tax refund, consider setting a bit of it aside to give your savings a boost. It’s tempting to use that “extra” money for something fun, like finally upgrading that tv, but future you will be grateful when your air conditioner decides to quit in July!

And one of the easiest ways to stay consistent? Automate it. Set up a transfer from your checking account to your savings every payday. Treat it like any other bill. Except this one’s paying your future self. After a while, you’ll barely notice the money leaving your account, but you’ll definitely notice how good it feels to have a growing safety net.

No matter what path you take to growing your emergency fund, every step counts! Taking this time to pour into your future only makes it better when the unexpected happens and you know that you can breathe easier.  Another great way to give your emergency fund an extra boost? Put it in a money market account so it can earn a good interest rate! Come into your local Crane Credit Union branch today to get started on building your emergency fund nest egg.