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Women's Initiative Discover

Building an Emergency Fund


Important suggestions from the Consumer Financial Protection Bureau

We all have experienced some unexpected financial emergencies. Setting up a dedicated savings or emergency fund is one essential way to protect yourself, and it’s one of the first steps you can take to start saving. By putting money aside—even a small amount—for these unplanned expenses, you’re able to recover quicker and get back on track towards reaching your larger savings goals.

An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses 
or financial emergencies. Some common examples include car repairs, home repairs, medical 
bills, or a loss of income. In general, emergency savings can be used for large or small 
unplanned bills or payments that are not part of your routine monthly expenses and spending. 


Why do we need an emergency fund?  

Without savings, a financial shock—even minor—could set you back, and if it turns into debt, it can potentially have a lasting impact.  Research suggests that individuals who struggle to recover from a financial shock have less savings to help protect against a future emergency. They may rely on credit cards or loans, which can lead to debt that’s generally harder to pay off. They may also pull from other savings, like retirement funds, to cover these costs.

An important reason to have an emergency fund is you have a sense of your financial well-being.

How much do I need in an emergency fund?
The amount you need to have in an emergency savings fund depends on your situation. Think about the most common kind of unexpected expenses you’ve had in the past and how much they cost. This may help you set a goal for how much you want to have set aside.

If you’re living paycheck to paycheck or don’t get paid the same amount each week or month, putting any money aside can feel difficult. But, even a small amount can provide some financial security.

Here are some strategies on how to build an emergency fund:

  • Set a goal. Having a specific goal for your savings can help you stay motivated.
  • Create a system for making consistent contributions. There are a number of different ways to save, and as you’ll read below, setting up automatic recurring transfers is often one of the easiest. It may also be that you put a specific amount of cash aside each day, week, or payday period. Aim to make it a specific amount, and if you can occasionally afford to do more, you’ll watch your savings grow even faster. 
  • Regularly monitor your progress. Find a way to regularly check your savings. Whether it’s an automatic notification of your account balance or writing down a running total of your contributions, finding a way to watch your progress can offer gratification and encouragement to keep going. 
  • Celebrate your successes. If you’re sticking with your savings habit, don’t miss the opportunity to recognize what you’ve accomplished. Find a few ways that you can treat yourself, and if you’ve reached your goal, set your next one.
  • Make your saving automatic. Saving automatically is one of the easiest ways to make your savings consistent so you start to see it build over time. One common way to do this is to set up recurring transfers through your bank so money is moved automatically from your checking account to your savings account. You get to decide how much and how often, but once you have it set up, you’ll be making consistent contributions to your savings.

See how Itasca Bank & Trust Co. can help you start saving for your emergency fund.  


Diane Middlebrooks
Women's Initiative Coordinator



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