An emergency fund is something we all know we need, but unfortunately, a lot of us don’t have any savings.

And if we do, we don’t know if we have the right amount.

Today, I’m sharing how an emergency fund can keep you on track to reach your financial goals and I’ll break down how much you really need.

Hint — it’s not the same for everyone!


There are two groups of people when it comes to saving money —




If you’re a non-saver, then I can totally relate.

It wasn’t that long ago that I was a non-saver myself. I was living paycheck-to-paycheck so I didn’t think I made enough, I didn’t think I had enough, and it just wasn’t a priority. I was just trying to survive and cover my basic needs.

But my savings lightbulb went on when I dug myself out of credit card debt and vowed never to get into trouble with credit cards again.

That’s when my then boyfriend proposed (he’s now my husband!), and I realized that I needed to start saving in order to pay for my wedding! We knew our parents weren’t going to cover it!

So I made saving a priority, and lo and behold, I realized that I COULD save!

And let me tell you, that felt GOOD!!

If you are a saver, then maybe you don’t know if you’re saving the right amount. How much do you really need in an emergency fund, anyway? Well, I’ll get to that in a minute.

First, let me give you some startling statistics:

According to a NeighborWorks America study, nearly 70 million Americans have no emergency savings and nearly one in four people would run out of money in 30 days if they stopped receiving a paycheck!

Do you fall into either of those categories?

Why do you need an emergency fund?

If you are working your way out of debt or working toward any financial goal, for that matter, you might find yourself taking one step forward and two steps back. If you can relate to that situation, then it might be happening because you don’t have an emergency fund.

If you can relate, then it might be happening because you don’t have an emergency fund.

Here’s the thing — when you have an emergency fund, then that means you’ve got extra money to cover any surprise expenses that come up. And by extra, I mean you’ve got money sitting in a bank account that you are not touching — unless it’s an emergency. So you’re covering all of your day-to-day expenses (including your debt payments) with another pot of money.

And by extra, I mean you’ve got money sitting in a bank account that you are not touching — unless it’s an emergency. So you’re covering all of your day-to-day expenses (including your debt payments) with another pot of money.

So you’re covering all of your day-to-day expenses (including your debt payments) with another pot of money.

Having that separate pool of money helps you put a stop to that frustrating cycle of one step forward and two steps back.

And it gives you a sense of security. You have peace of mind when you know that if something comes up, you’ve got the funds sitting there to cover it.

If next week, your car breaks down, or your son breaks his arm playing baseball, you won’t have heart palpitations trying to figure out how to cover it. Imagine not having to put the expense on a credit card, and think about how good it will feel to pay with cash.

If you’ve never had savings before, then I challenge you to do whatever it takes to build up some savings. Even if your initial goal is to save $100 and not to touch it, I guarantee that you will sleep better at night knowing that money is there and that you have the self-control not to spend it.

How much do you really need?

The bigger your emergency fund, the bigger the surprise you’ll be able to handle.

The industry standard recommendation for an emergency fund is 3-6 months of living expenses.

And I think that’s an excellent goal to shoot for because if life throws you a huge curveball (such as a job loss or needing a new roof), you’ll be better prepared to handle that.

But if you’re traditionally a non-saver, when you do the math, that adds up to a lot of money, which can seem a little intimidating.

Let’s say your living expenses are $4,000 a month.

Three to six months worth is $12,000 to $24,000.

That’s a lot, right?

Especially if you’re starting at $0.00.

I really like the idea of a starter emergency fund, especially when you’re digging your way out of debt.

Determine an amount that feels right for you.

Some finance experts recommend $1,000 to start, but I think your starter emergency fund should be anywhere from $1,000 to $5,000.

Again, if you’ve never had savings, then just start with $100 and build from there.

But if you are a saver, and you’re working your way out of debt, then play with the numbers. If you’ve got $7,000 in savings, it might not feel right to drop it down to $1,000 because you’re paying off debt.

I married a saver, so as long as we’ve been married, we’ve always had some savings. When we started our debt free journey in August 2013, we had just built up our savings because we transitioned from two incomes to one a few months earlier.

We had built up our savings to $27,000, and we knew we wanted to use part of that money to pay off some debt. But we did not feel comfortable taking it all the way down to $1,000.

We were homeowners, had a two-year-old, and we had a baby on the way so we knew there were a number of potential surprises that could throw our plan off course.

We cut our savings in half to pay off Mike’s student loan, which was the first item on our debt snowball, and that gave us some momentum. Then we saved as much as we could until our daughter was born, and we knew that we were all healthy.

That’s when we decided to take our savings down to $5,000 until we had paid off all of our non-mortgage debt.

Last year, our goal was to pay off our last non-mortgage debt and build up our emergency fund to six months of expenses.

We hit both of those goals in August, and I can tell you it feels ah-mazing to know that when life throws us curveballs (because you know it will at some point!), we’ve most likely got the funds to handle it without going into debt!

To recap…

If you’ve never had any savings, start small, and build from there. Challenge yourself to save $100 or $500, and don’t touch it!

Try it! You just might like it!

Try it! You just might like it! #savings Click To Tweet

Then build up to $1,000 or whatever number feels right for your situation. Because at the end of the day, you’re the one who has to go sleep at night with that number in your bank account. Make sure it’s the number that gives you peace of mind for your situation right now.

Once you’ve paid off your non-mortgage debt, then grow your emergency fund to the standard three to six months of expenses.

Now I’d love to hear about you!

Are you a saver or a non-saver? How do you decide how much you need in your emergency fund? Please share in the comments below.

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I invite you to join me in our private Facebook group called Your Debt Freedom Family, where I share more tips like this. We’ve got a fantastic community of people who are kicking debt to the curb so they can break free and live life on their terms.

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I’d love to see you there!

Keep moving forward toward your goals. You really can live the life you dream about!

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