Building an emergency fund is one of the simplest ways to create financial stability. It gives you a cushion when life throws something unexpected your way, so you are not forced to rely on credit cards or take on new debt.
In our recent KWLM Ask the Expert segment, Mandy Fleming, Market Manager at Heritage Bank, shares practical tips on emergency savings and how to get started. You can watch the full segment below.
If you have ever wondered where to start or how much is enough, you are not alone. Let’s break it down into practical, real-life steps you can stick with.
What Is an Emergency Fund?
An emergency fund is money set aside to cover unexpected expenses. It is not for planned purchases or everyday spending. It is there to protect you when something urgent happens that you did not see coming.
Without an emergency fund, even a small surprise expense can create a bigger setback. As Mandy Fleming explains, putting all your money toward debt without keeping cash on hand can leave you vulnerable. If something unexpected happens, you may end up relying on credit or taking on new debt.
Even a small amount saved creates breathing room and helps you stay on track with your financial goals.
What Counts as an Emergency Expense?
A true emergency is unexpected, necessary, and needs to be handled right away.
Examples include:
- Car repairs
- Medical expenses
- Essential home repairs
- Covering bills during job loss or income disruption
These are situations where delaying action could make things worse.
What Does Not Count as an Emergency?
It can be tempting to label everything urgent, but not all expenses qualify.
Not considered emergencies:
- Vacations
- Concert tickets
- Entertainment purchases
- Planned expenses
As Mandy Fleming points out, a good way to tell is to ask yourself: Is it unexpected? Is it necessary? Does it need to be handled immediately?
How Much Should You Have in an Emergency Fund?
The right amount depends on your situation, but starting small is key.
- Starter Goal: $750 to $1,500 – This is a realistic first step. It may not cover every emergency, but it can handle common surprises and reduce your reliance on credit cards.
- Intermediate Goal: One Month of Expenses – Once you have a starter fund, you can work toward covering one full month of essential expenses.
- Long-Term Goal: Three to Six Months of Expenses – Over time, building up three to six months of expenses can help you stay stable during major disruptions, such as job loss.
The key is progress. You do not need to hit your long-term goal right away.
Should You Save or Pay Off Debt First?
This is a common question, and the answer is not all-or-nothing.
Paying down debt is important, but putting every dollar toward it can leave you exposed. Without savings, one unexpected expense can push you back into more debt.
A balanced approach often works best. Build a small emergency fund while continuing to make progress on your debt. This helps protect the progress you are already making.
Where Should You Keep Your Emergency Fund?
Your emergency fund should be easy to access when you need it.
Common options include:
- A savings account
- A money market account
If you’re getting started, a simple savings account is often the easiest place to begin and keep your funds accessible. The most important factor is accessibility. When an emergency happens, you want to be able to use those funds quickly without penalties or delays.
Many people also choose to keep their emergency fund in a separate account, so it is not mixed in with everyday spending.
How to Build an Emergency Fund from Scratch
Starting from zero can feel overwhelming, but small, consistent steps add up.
- Start Small – You do not need to save large amounts right away. Even $15 or $20 per paycheck is a great place to begin.
- Set Automatic Transfers – Automating your savings makes it easier to stay consistent. When money automatically moves into savings, you are less likely to spend it.
- Use Unexpected Money – Tax refunds, bonuses, or gifts can give your emergency fund a quick boost.
- Reduce One Expense – If you’re looking for simple ways to free up extra money each month, small budgeting changes can go a long way.
- Build the Habit – Consistency matters more than the amount. Even small contributions build momentum over time.
Common Emergency Fund Mistakes
Avoid these common pitfalls when getting started:
- Setting unrealistic savings goals that feel overwhelming
- Waiting for the “perfect time” to start
- Using emergency savings for non-emergencies
- Not keeping savings easily accessible
If saving feels overwhelming, it becomes harder to stick with. A simple plan you can follow is more effective than a perfect plan you cannot maintain.
Frequently Asked Questions
Yes. Starting small is one of the most effective ways to begin. Even setting aside a few dollars consistently makes a difference.
It depends on your income, expenses, and savings habits. The important thing is staying consistent and building over time.
Yes. Building a small emergency fund while paying down debt helps prevent taking on new debt when unexpected expenses arise.
Start Small and Keep Going
If there is one takeaway, it is this: you do not have to do everything at once. As Mandy Fleming shares, it is never too late to start saving, and no amount is too small to begin.
Focus on one step this week. Set aside a small amount. Set up an automatic transfer. Review your spending. Write down your goals.
And most importantly, celebrate your progress along the way. Building an emergency fund is not about perfection. It is about steady, consistent steps toward greater financial stability.
For more practical financial tips and insights, explore additional conversations from our Heritage Bank team.
Prefer to listen to Mandy’s interview on KWLM’s Ask the Expert? Click below.
Disclaimer: This article is for educational purposes only. Please consult a financial professional for guidance specific to your situation.
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