Emergency Savings – Your Financial Shock Absorbers

“I do understand the benefits to have an emergency fund, but every time I think about the amount of money I would have to save, I talk myself out of starting. Instead, I find something else to spend the money on and then something happens and I regret not having that fund.”

Does this sound familiar? You are not alone. Lets talk about how we can start this right away and experience the benefits of having an emergency fund.

An emergency fund is money that you have saved up for the sole purpose of helping you maintain your normal life through the emergencies that life hands you. Most of the time, you should not touch the emergency fund at all – it just sits there earning a bit of interest and waiting until you actually need it.

Quite often, people who don’t have an emergency fund see the idea of having to save up money as some form of punishment – after all, money put in a savings account and locked away is money that can’t be used to live, right?

Actually, it’s quite the opposite – having an emergency fund means that you do have room to breathe. You don’t have to completely panic if your car breaks down or if you lose your job or if you suddenly need to replace a appliance. Instead of having to find some way to squeeze those expenses onto a credit card or ask a friend for some money to help, you can just pay the bill – no worries.

Your Emergency Funds are only for emergencies and if you want to splurge, have a savings account for big splurges, too, if it makes sense for you. It’s important, though, to just leave the emergency fund completely alone until you need it. Deposit money in there and don’t even look at the balance until an actual emergency occurs.

Set Your Initial Target Low

Many people bite off a gigantic goal for their emergency fund right off the bat and then find that it’s very hard to get there. Eight months of living expenses is an enormous goal, one that will take years to reach – and along the way, you’re bound to get disheartened. You’re faced with a daunting task—if you focus on the total. But a total is made up of smaller parts, and those are chunks that you can reasonably achieve each month. 

Instead, one great way to start is to set a goal that’s more reasonable. Make it your initial goal to have an emergency fund of just quarter of your one month’s living expenses. That’s a goal that you can reach in just a few months (or even less if you’re in a good income situation) and yet it’s an amount that can make a huge difference when you have an emergency.

Then, break that goal down into smaller pieces of weekly goals and keep it a number that will challenge you at first but also make it reachable.  Find your breathing room.

The Bottom Line


Everyone needs an emergency fund—no matter how old you are or what your income level is. The current pandemic is just the latest reminder. But there are numerous other circumstances that could require having cash on hand—losing a job, natural disasters, a leaky roof, unexpected child care expenses, a surprise medical bill that insurance won’t cover, or family members returning home or needing help.

Planning ahead is key to get you prepared for what life throws at you. And those small action steps can bring peace of mind.

Margaret Mekaat

Margaret Mekaat

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