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How to Build an Emergency Fund from Scratch

Unexpected financial emergencies can happen to all of us. Whether it's a flat tire, a flooded basement or a fractured ankle, there are times when you need to access extra cash quickly.

“Life happens" moments like these are when having an emergency fund is invaluable. Think of your emergency savings as a financial safety net that prevents you from relying on credit cards or loans in a pinch. If you don't already have an emergency fund, there's no time like the present to start saving! 

Here's how to build your emergency fund from scratch:

#1: Know what you need

Ideally, your emergency fund will cover three to six months of essential household expenses. This may include rent, utilities, groceries, childcare, transportation and other monthly expenses. Take a look at your account statements to determine what your “bare-bones" budget would be in the event of a major emergency like a job loss.

If the idea of setting aside three to six months' worth of expenses feels intimidating, it's okay to start with a smaller goal such as $500 or $1,000. The key is to get started and keep going until you reach your emergency fund goal!

#2: Decide where to keep your emergency savings

Your emergency fund should always be quick and easy to access. You'll also want to avoid mixing your emergency savings with your regular checking or savings account, so you're not tempted to use it for non-emergencies. Consider opening a separate high-yield savings account or money market account to give your money a safe place to grow until you need to use it.

#3: Go automatic

One of the best ways to get into the habit of saving money is to make it automatic. Put your emergency savings on auto-pilot by setting up small recurring transfers to occur every week or on your paydays. This way, you'll be adding to your savings consistently without even thinking about it!

Another way to boost your emergency fund is to make extra deposits whenever possible. For example, plan ahead and put part of your tax refund toward your emergency fund. Start a side hustle to earn extra cash. Or, free up money in your budget by cutting back on expenses like subscriptions and dining out.

#4: Use your emergency fund wisely

Now that you know how to build an emergency fund, it's important to understand when — and when not — to use it. Unexpected expenses such as vehicle repairs or medical bills are good reasons to tap into your emergency savings. On the other hand, expenses that you can predict, like routine vehicle maintenance or holiday gifts, should not be paid for with your emergency fund. Instead, plan ahead and save up for these expenses in separate savings accounts.

If you do need to use your emergency savings, be sure to work on rebuilding your fund quickly so you're prepared for the next rainy day.

Jumpstart your emergency fund with WPCU!

At Wright-Patt Credit Union (WPCU), we want to help you achieve the flexibility to weather financial storms and challenges as they arise, as well as the freedom to take advantage of opportunities that may come your way. When you're ready to build your emergency fund, stop by your local Member Center to sit down with a Financial Coach and develop a plan that fits your needs and budget.

Looking for more helpful tips, tools and advice? Be sure to visit our online Education Center to explore our worksheets, financial calculators, videos, interactive learning modules and upcoming community workshops, seminars and webinars.