top of page

Creating an Emergency Fund

Creating an emergency fund may be one of the most important things to start with when we talk about financial planning and budgeting. Over the last few years there has been a lot of uncertainty with the pandemic, interest rates, and inflation. Many individuals were out of work for weeks at a time and placed in a tough spot financially. An emergency fund can help ease the burden of these tough times. An emergency doesn’t need to be dramatic, it’s simply an event that was not planned.

Adding an emergency fund line item to your budget and setting money aside each paycheck to build your emergency fund is essential. First, work your way up to a $1,000 emergency fund. This is a good starting amount as it will often cover most emergency costs. It is often recommended that the emergency fund is then built up to be 3-6 months of your expenses. Include any amounts for bills, housing, vehicles, food, and any other needs specific to you and your household. This will help keep you on your feet in case of a large emergency such as job loss or a medical emergency. Keep these funds separate from your spending money whether it be in a sub account in your bank, a separate bank account, or in a safe at home. There is not one right answer. What works for me may not work for you.

Why is an emergency fund so important?

· Finances are one of the main stressors in our lives

· A financial cushion to fall on when something unexpected happens

· Peace of mind

· It allows you to avoid using credit cards and loans when an emergency happens

· You become your own insurance plan

I came across a 52 week saving plan on Facebook a couple weeks ago and thought this might even be a good way to build an emergency fund over the course of the year. You probably will want to build an emergency fund quicker, but this goes to show how little you can contribute to reach that goal. It’s not a bad idea to have fun when saving your money. Maybe this visual will help motivate you.

*Remember that an emergency fund is there for your own peace of mind. You should avoid using your emergency fund for anything other than emergencies. If you do have to use it, make a plan on how to build it back up as soon as you can and be grateful it was there when needed.

Elexys Thomas graduated from Utah Valley University (UVU) with a degree in Personal Financial Planning - a top 3 school for financial planning and has passed the Accredited Financial Counselor exam. She is passionate about sharing financial principles and helping individuals and families meet their financial goals. She'll be updating this page monthly to help you with your financial wellbeing. You can reach her at

Recent Posts

See All

Planning for Christmas

We talked about creating a budget a little while ago. I just got back from a trip. While in Chicago, I attended a White Sox game where they were celebrating Christmas in July. While it's not longer Ju


bottom of page