Building an emergency fund: A how-to guide

As a mother, it can feel like your mental load never gets lighter. Many things keep my mind racing at night, from ongoing grocery lists to my kids’ school projects to saving for emergencies. But an essential part of reducing that stress is building a solid emergency fund so that you are prepared for the unexpected. Life is unpredictable, and having a financial cushion can provide peace of mind and security for you and your loved ones. But how do you even calculate what you need in an emergency savings account fund? Here’s a comprehensive guide on how to build a robust emergency fund.

How to start an emergency fund: 11 steps to keep in mind

1. Set clear goals

Determine the amount you need in your emergency fund. Typically, it’s recommended to have at least three to six months’ worth of living expenses saved. Consider your family’s unique circumstances and financial obligations when setting your goal.

2. Create a budget

Track your monthly income and expenses to identify areas where you can cut back. Allocate a portion of your budget specifically for your emergency fund.

3. Start small

If you’re new to saving, it’s OK to start with a modest amount. Even saving $50 or $100 a month can add up over time. 

4. Automate savings

Set up automatic transfers from your checking account to your emergency fund. This ensures you consistently contribute without the temptation to spend the money elsewhere.

5. Prioritize debt

If you have high-interest debts, such as credit card balances, consider paying them down first. Once your debt is manageable, allocate those funds to your emergency fund.

6. Explore savings accounts

Look for high-yield savings accounts or money market accounts that offer competitive interest rates. This can help your emergency fund grow faster.

7. Use windfalls and bonuses

Whenever you receive unexpected money, such as tax refunds or work bonuses, allocate a portion of it to your emergency fund.

8. Cut unnecessary expenses

Regularly review your expenses and eliminate non-essential items. Redirect the money saved towards your emergency fund.

9. Stay consistent

Building an emergency fund takes time and discipline. Stick to your savings plan, even when faced with temptation.

10. Save for true emergencies

Your emergency fund should be used for genuine emergencies, such as medical bills or unexpected car repairs, not for vacations or non-urgent purchases.

11. Reevaluate periodically

As your financial situation evolves, revisit your emergency fund goals. Adjust your contributions accordingly.

A note from Motherly on building an emergency fund

Building a solid emergency fund is an essential aspect of financial security for you and your family. By setting clear goals, creating a budget, and prioritizing savings, you can ensure that you’re prepared for life’s unexpected twists and turns. Remember, even small steps toward building your emergency fund can make a significant difference in your family’s financial stability and peace of mind.