What is an Emergency Fund?

emergency funds savings
What is an Emergency Fund?

Did you know that the average American does not have enough savings to replace a flat tire?  


The average person in America would have to pay for a new tire with a credit card.  Then, pay that tire off over months, incurring additional interest and making the cost of the tire even higher!   

Your Emergency Fund is your soft cushion to land on when these kinds of life events happen.

An Emergency Fund is a savings account that contains money specifically set aside to cover your living expenses in the event you lose your job or income or have to pay for an unexpected expense, like a flat tire or a crown for a broken tooth. 

If you don’t have a savings account yet, the Emergency Fund is the first savings account you need to start and what I call my “Rainy Day” Fund.  Because honey, it ALWAYS rains!



Your Emergency Fund covers the big expenses in life you can’t control, but which you need to plan for!  

Think, getting laid off, getting sick, or getting in a car accident and getting hurt.  

These are things that we all hope don’t happen, but we all know could happen.  The Emergency Fund helps us prepare and pay for those unexpected life events.


How Much Should Be in an Emergency Fund?

Before the pandemic, I used to feel like 3 months' worth of net paychecks was probably enough for the average person.  If you lost your job, pretty much anyone, even someone at a director level or above in a large corporation, could find another job in three months. 


But, that was in the “before-time”. 


Since the pandemic, I’ve watched friends who have never been unemployed in their lives spend six months looking for a job.  I’ve seen friends get sick, but even more often than that, I’ve seen friends have to move back in with aging parents to take care of them and make sure they don’t have to go to the grocery store and the pharmacy where they could be exposed.  I’ve seen a LOT of my friends with small children at home struggle or go part-time so they could home-school.  

In other words, the pandemic pulled the rug out from under all of us and it changed my thinking on Emergency Funds.  

My new thoughts on Emergency Fund goals?  A bare minimum of 3 months.  Six months would be better and a year is my ultimate goal.  


Yes.  I said a YEAR.  I know.  It’s a LOT.


It’s going to take me quite a while (read a couple of years) to save that, and I’m going to have to get a little creative, put some home improvement projects on hold and maybe take on more coaching clients for a while.  But, Emergency Funds are for rainy days, and during the pandemic, it rained a LONG TIME. 

But, that’s a Big Hairy Goal.  Where should you START building your Emergency Fund if you don’t have one? 


Read ON!

[Are you already a pretty good saver, you’re just looking for MORE?  Then, I humbly invite you to check out my Weekend Money Makeover Workshop.  It’s a four-part video course of the advice I give my girlfriends - and even my girlfriend's girlfriends!  AND it’s FREE right now! Just GO HERE]


The “Everyday Average Emergency” Fund

The “Everyday Average Emergency” Fund is part of your regular Emergency Fund.  

An “Everyday Average Emergency” isn’t the extreme event of getting laid-off or having to suddenly quit your job because of a family emergency.  

 Instead, the Everyday Average Emergency is a just...a Bad Day.

It’s cracking a tooth and needing a crown, tripping on the sidewalk and breaking your wrist, or picking up a nail in your tire.  These are all things that have happened to me and can happen to you, too. They’re just life.  

The Everyday Average Emergency fund helps you prepare for, and pay for, those Bad Days in Life everyone has without having to put the expense on a credit card. 


The Everyday Average Emergency typically costs you between $400 (a new tire) to $2000 (health insurance deductible).  Not a huge life-shaking amount, but enough to cause a pretty good hiccup in anyone’s monthly money plan.


I recommend saving $2000 towards an Everyday Average Emergency fund to all my clients, subscribers, and followers who are trying to become savers. 


Saving an Emergency Fund Takes Time, But it’s Worth It

 Saving six month’s worth of net paychecks, or even just $2000 can sound like a lot, and it is!  If you’re starting at zero, be patient, it’s going to take some time.  But tying the act of saving that money to a specific “event” seems to help make the goal more tangible for most people.  For the purposes of an Emergency Fund it’s to prepare for the next “Rainy Day”, or even just a “Bad Day”.  

It’s not just “random money” sitting in a savings account.  That money now has a purpose.  You aren’t just shoving money into a savings account because you “should”, you’re preparing for those Bad Days in Life everyone has.  It’s kind of like Bad Day Insurance.  

We have insurance “just in case” we get sick or have a car accident.  The Every Day Average Emergency fund is our “just in case” of a Bad Day savings account.  Our overall Emergency Fund is our insurance against those days in life when it “rains” Really HARD!   

This is why Emergency Funds matter and should be part of your overall financial foundation.  They give you that cushion you need when things go wrong and let you land a little bit softer than you might have without it.   

Because when it really rains, or when a Bad Day happens, knowing you have the cash to take care of it makes life a little bit easier in the moment.

Now, figure out how much you're going to start saving towards your Emergency Fund and then DM me on Instagram so I can celebrate with you!


All right, let's go - You Got This!







**I am not a licensed financial advisor.  I am a money expert and I offer education, tips, tricks and my opinions around money.  You should consult a professional who understands your needs in order to make the best decisions for you!  Additionally, some links in this blog may be affiliate links, which means if you click the link and buy the product I may earn a small commission - at NO COST to You! It’s one of the ways I keep the lights on around here so TYIA! 😉

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