Building A Strong Emergency Fund Is Essential Now

by Dr Joanne Narae

If there’s one thing financial experts agree on, it’s this: everyone needs an emergency fund. Life has a way of throwing curveballs—unexpected car repairs, medical bills, broken appliances—and when it does, an emergency fund can be the difference between a minor inconvenience and a major crisis.

I didn’t always have one myself. In fact, back when I was younger, I had no idea how critical it was to set aside money for emergencies. And when those little (or big) surprises came up, the stress was intense. Even small amounts of unexpected expenses felt overwhelming without a financial safety net.

What Is an Emergency Fund, Really?

An emergency fund is money you’ve set aside specifically for unplanned expenses. Think of it as your personal buffer against life’s unpredictability. Whether it’s $500 or $5,000, it gives you options, security, and peace of mind.

But there’s a difference between having cash lying around and having a smart emergency fund. For a while, I thought I was doing okay because I had extra cash in my bank account. But that money was slowly losing value due to inflation because it wasn’t earning interest or growing.

How to Start Building Your Emergency Fund

Here’s the good news: you don’t need to save thousands overnight. You can build your emergency fund in stages:

1. Start small – Aim for $1,000–$2,000 (or the equivalent in your local currency). Keep this in a high-yield savings account or money market account so it’s earning something and still accessible.

2. Don’t wait to invest – Once you’ve hit that initial goal, begin investing. You don’t need to have the full 3–6 months of expenses saved before you start. Your future self will thank you.

3. Avoid credit cards for emergencies – It may seem like a quick fix, but if you can’t pay it off immediately, interest charges can quickly snowball and harm your financial health.

4. Build toward 3–6 months of expenses – Over time, work your way up to a more robust emergency fund. This should be enough to cover your normal monthly expenses in case of job loss or other income disruption.

5. Adjust as your life changes – Bought a house? Had a baby? Changed careers? Your emergency fund should reflect your current lifestyle and responsibilities.

6. Think long-term security – If you're more conservative or simply prefer extra peace of mind, consider saving up to 12 months of expenses.

   
   

Final Thoughts

Creating an emergency fund isn’t always easy, especially if you’re juggling debt or living paycheck to paycheck. But even small, consistent steps make a big difference. Automate your savings if you can, and track your progress monthly.

Start with what you can. Build gradually. Adjust as needed.

With a solid emergency fund, you’ll sleep better at night—and be ready for whatever life throws your way.