Emergency Funds

As you may have noticed at the end of the previous page, there are so many barriers that can arise to get in the way when you're pursuing your financial goals. Sometimes, of course, those are emergencies, unexpected events that can eat into your more future-oriented savings.

If You Can, How Much​ Should You Save?

The goal is to have six months of living expenses in an account you can access easily, like a savings or checking account. However, it’s okay if you don’t have that yet. You can start small (like 3 months) and add to it over time – but try to build up to six months of expenses. 

Once you’ve got your emergency fund in place, you can focus on other priorities: saving for the down payment on a house or a new car and, of course, saving for retirement. Emergencies like the pandemic have shown how much savings can help when times get difficult.

If you answered no, you're not alone! We know there will always be unexpected expenses, but due to many circumstances like the ones we saw on the previous page, 39% of all Americans wouldn’t be able to cover an unexpected $400 expense without using a credit  card or borrowing the money — which can cost you  even more money in interest.

(Source: Federal Reserve Report on the Economic Well-Being of U.S. Households, May 2019​

https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf​)

Quick Discussion Question

In order to think together about what expenses we need to plan for, please answer the following question in the chat: what is one expense you think is important to have emergency savings for?