In a perfect world, nothing would go wrong, and all our best-laid plans would go without a hitch. The reality? Life isn’t quite that simple. Enter your emergency fund—the best way to safeguard your financial well-being and prevent debt when you encounter the unexpected.
Why an emergency fund matters
Smart financial planning. Emergency funds provide a buffer to ensure your finances stay on track, no matter what.
Not today, debt. Being prepared means you don’t have to turn to a credit card to cover expenses you didn’t plan on.
Peace of mind. There’s nothing quite as comforting as knowing you have contingencies in place that help you take on all of life’s scenarios with confidence.
When might you need an emergency fund?
Changes in your job situation. A safety net is everything when you decide it’s time for a change or go in pursuit of your dream job.
Medical emergencies. Getting well soon is easier when you’re prepared with extra cash set aside for deductibles, copays, and other expenses not covered by your insurance. Even a pricey vet visit for your four-legged family members can trip up your budget.
Home and car repairs. An emergency fund gives you a “bring it on” state of mind to everything from an oil change to a new roof.
How much should you save?
This really depends on your personal situation, what your spending is compared to your income and any debt you might have. Even if it’s modest at first, the smallest emergency fund can help build a foundation for your financial resilience.
How to build an emergency fund
Track your expenses and assess your budget. Find anywhere you can trim unnecessary spending and prioritize paying down high-interest debt to dedicate more resources toward your emergency fund.
Set small, attainable goals. Anyone can attest that it’s easier to succeed if your goals are clear and realistic. Whether it’s trimming $50 from your budget and setting that aside or paying off your smallest card balance, every step makes your money work harder.
Leverage windfalls. Instead of upgrading to the latest phone or splurging on a TV (no matter how good the sale), direct sudden boosts—like bonuses, tax returns, or other unexpected cash—into your emergency fund.
Where to keep your emergency funds
Accessibility and safety are the name of the game when it comes to storing your emergency fund. A high-yield savings account—like our Growth Savings Account—is a great option because it balances two important factors: quick access when you need it, and stronger interest earnings than a standard savings account. That means your money is working harder for you in the background but totally accessible for life’s curveballs.
Depending on your goals, you might also explore other savings options that give you room to grow while keeping it safe—like money market accounts or even Term Savings Certificates for a longer-term solution. The right fit depends on how much flexibility you need and how long you’re comfortable setting funds aside.
An emergency fund doesn’t just protect your finances—it gives you confidence. With the right plan and the right tools, you’ll be ready for whatever life throws your way.
