Emergency Fund- Let’s Do This!

Having an emergency fund is a necessary building block of a sound financial plan. Why? Because we all will have an emergency or two, or three.. at some point in our lives. The year 2020 has shown us that front and center. An emergency fund is paying yourself first. Not only does it bring security for the future, it positively affects your present. Even in these times, you are doing something proactive for your financial well being.

So the best time to start is now. After I allocate money monthly for my necessary, (key word necessary), living expenses such as housing, food, utilities, car insurance, and other necessities, next comes my emergency fund. Little by little, month by month, I have managed to save a nice emergency fund. I continue to put money into the account each month and it is satisfying and encouraging to see it grow. An emergency fund gives me peace of mind and that is priceless.

First Goal

If you already have an emergency fund- fabulous! Keep adding to it monthly and you continue to give yourself a bigger and bigger cushion of security. If you do not yet have an emergency fund- let’s get one started! There is much financial talk about the first goal of an emergency fund. It is largely agreed that $1,000 is the first goal. There is something about having $1,000 set aside for life’s possible emergencies, that just makes you feel better.

I am in agreement with targeting $1,000 as your first emergency fund goal. It is a doable goal, even if you have to start by a small monthly contribution. The key is getting started. Once you get into this monthly habit you will start to feel more secure and confident about money matters. I am almost certain that you will be inspired to find ways to add more money to your monthly emergency fund allocation because it makes you feel good. There is freedom in having money set aside for emergencies. It clears away worry.

Second Goal

After you get $1,000 in an emergency fund, continue to add to your account monthly. The second goal of an emergency fund is 3 months of living expenses. Yes, this is a large jump but do not be daunted. Saving for an emergency fund is a practice, like much else in life that is worth doing. Feel good along the way that you are moving forward to financial security.

Once you diligently start putting aside money into your emergency fund every month, something curious tends to happen. You get creative and find ways to cut other expenses so you can build your emergency fund quicker. Things that maybe you spent money on before without really thinking about it, now give you pause. You may think do I really need/want that (fill in the blank) or would I rather put that extra $50 into my emergency fund this month.

Fully Funded Emergency Fund

Once you grab the reigns of your financial life, you will like being in control of your money instead of your money being in control of you. It is very empowering. So, let’s talk about a fully funded emergency fund- which is equal to 6 months of living expenses. Yes, again this is a big jump but just go on the same principles you have been using to build your emergency fun so far. You can make it a game/challenge with yourself. Put some fun into it and feel the beauty of little by little becoming financially secure. Now those possible emergencies that are down the road do not seem so scary.

Real Life Example

Here is a simple example of why an emergency fund is so important to your bigger financial picture. Your car breaks down and you do not have an emergency fund. You need your car asap because it gets you back and forth to your job. So what often happens…you whip out that credit card and charge the repair and maybe even a tow to the garage. So the repair cost is $400 and the tow is $150 and now that $550 is on your credit card.

If you do not pay your credit card bill in full every month (which is also key to a sound financial plan) the repair cost is now $550 and any additional interest for each month you do not pay your credit card in full. So this one event could cause you to literally be throwing money away via credit card interest and also increasing your stress level. Even with a $1,000 emergency fund- this car repair would have been resolved immediately.

As a side note on vehicles. I am a member of Triple A and have found the yearly amount I pay to be a fraction of the cost of the benefits I have received from Triple A. One tow or one getting locked out of my house (yes, it has happened) and I have used more money in Triple A services than my annual fee amount. Additionally, I have the ever so important peace of mind. I choose Triple A and have used it for years but there are other such services or your car insurance company often will add a tow package for a minimal additional cost. Thinking ahead to the what ifs in life comes in useful when an emergency strikes.

Financial Responsibility = Financial Freedom

I teach that a main element to becoming financially free is to become financially responsible. To see that responsibility as an actual freedom in itself. If you are acting responsibly with your money you will begin to feel less stressed, worried, and fearful and then the fun, creativity, and freedom begins to emerge around money. It is a money mind shift!

So today, think about making an emergency fund a priority in your life and save towards your goal each month. You are paying yourself by creating an emergency fund- and you are so worth it!


Susan, The MoneyMaestra

Susan Howell
Written by: Susan Howell, The MoneyMaestra.

Even though I grew up without money, I was able to retire at 50 based on my financial practices. I worked for the Federal Government for 26 years, with 6 of those years at the IRS and 20 at the Department of Justice, which included investigating many money-related cases.

I created MoneyMaestra to share what I know and to help people get on the path to Financial Freedom.


  1. Cheryl

    Great advice. I always feel better when I have a little cushion in the bank. I haven’t made my emergency fund “official”, and I think I will! Thanks for the inspiration.

    • Susan Howell

      Thank you Cheryl! Yes, it always feels better to have that cushion. Yes, make it official:)

  2. Karyn Keil

    I love the symbolism of the photo. Time is going to pass regardless of what we do, so we might as well make it count! And then we can count on our emergency fund as we count up our savings 🥳

    • Susan Howell

      Thank you Karyn. Yes! An emergency fund is something that can be done in the present- it makes you feel good now and is also security for your future. A definite win/win.


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