Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

Emergency Fund 101

July 23, 2015 at 12:00 AM

It makes me so sad to read reports that many households don’t have even $1,000 set aside to cover an unexpected expense. What’s so sad is that I know that must cause such stress. If you don’t have an emergency cushion, on some level you’re always worried about what you’ll do if one of life’s “what ifs” strikes.

I know many of you want to have an emergency fund, but then you talk yourself out of it before you ever begin saving. Because you know you can’t just snap your fingers and have plenty saved up, or you think you can’t afford to start saving now.

No more excuses. You can do it. You must do it. Here’s how to start TODAY.

  1. Open a savings account. It can be at the bank or credit union where you currently have a checking account, or shop online for a high-yield offer. 
  2. Name it. If you have online access to your account, chances are you can name your different accounts. Be sure to give your savings account a very specific name: My Emergency Fund. Or: My Safety Net. Trust me, every time you log on and see the account name it will serve two purposes: it should make you feel so great to know you are building security, and by reminding yourself of your goal you will be less likely to raid the account for a non-essential expense.
  3. Set up an automatic monthly transfer from your checking account into your savings account. This is the crucial step. You must remove yourself from the equation. We all have good intentions, but often can’t follow through on our intentions. By setting up automated deposits into your savings account you are setting yourself up for success.
  4. Push yourself to save a little bit more. How much to save each month is up to you. Think through what you want to start with. Got a number in mind? Okay, now I challenge you to increase that amount by 10%. (20% is even better!). Please don’t dismiss this challenge before you try it. What I have seen work over many years is that if you go ahead and set up the bigger transfer and stick with it for a few months-even if it seems like way too demanding a sum-what you will find is that you adjust to having less money in your checking. Just give it a try. If after three months it’s just too hard to do, then you can ratchet it down a bit.
  5. Aim for an eight month emergency fund. Your long-term goal is to have eight months of living expenses set aside in your emergency fund. I know that’s a lot, but I want you and your loved ones to be okay if you were ever laid off, or sick for an extended period of time. Sure, it could take years to reach your eight-month goal. That’s totally okay. The important issue is that you are starting to save today and so every month you will be moving closer to your goal.

Tag Cloud

Swap Older Annuities or Life Insurance monthly benefit long-term care low-cost index mutual fund2015 record year car saleshome buying seasonpay off debtOverspendingyours, mine & oursrefund20% down paymentdeath benefit needs for familygift up to 14,000Financial Gift Cliff2016 adjust withholdingjuggle multiple financial goalsBaby Boomerscompare provider pricingno tax on withdrawlscouple financescut monthly cable billsmall changes interest on student loansresponsible with moneynew carHDHP's are not badSchool of Social Workgift grandchild IRA contributionstandard ratelower ratephysical healthmortgageemergency fund january billsconfidentFinancialincrease emergency savingshome budget after tax costsummer job match income increased auto insurance premiumAmericans don't use all paid vacation timeuniversal college accesssuitablecostly legal women outlive menpublic service career student loan repayment MotherCredit scoreidentity theftpoint cost offset by savingstraditional vs roth 401(k)switch to roth 401(k)four steps to retirement savings Money Marketemotional stakesHigh Credit Scorecommunity bankno sneaking in feesmanage student loansCPI-WHSA tax savingsspring summer Financial SystemPrime Rate Increasewaive home inspection bidbuy homealways use all paid time offEmergency SavingsFinancial Solutions For YouARM CautionInfluential CelebrityAccuQuote.comterm life insurancecomparison shoppingschool Federal Stafford loanChanging Livesultimate compounding giftcar loancontribute household expenses allowance taskis it necessary?loan no longer than 36monthsraise your deductiblepay down car loanGiftdon't use allowance as bribebetter loan dealscollege graduatepeace of mindRetirement SavingsUS Tax Code50 over 50max employer matched 401(k) contributionincentives for health care wellness screeninganticipated salaryHeartlow mileage discount3 savings buckets Fundsproperty taxpositivebreakdown projected monthly housing coststudentpreexisting condition not coveredWashington20% down payment avoid feesfederal student loan deferment allowanceHDHP'sFinancial Educatorwives should be involved in retirementsame-sex marriageMarlo Thomasrequired disclosureUrbana-Champaignhigh premiumspercentage of women widowed 75-84mortgage disclosureunexpected expensestudent loan debtclosing costs 2% of loandental savings planCombo Insurance Productsalternative FICO scorenon conventional route401KAlarm ClockSave Us Moneycredit reportnegotiate points with bank or sellerretain separate credit cardsFinancial Awareness Video FestivalMost Influential Celebrities ListRetirement Incomedeath benefit 20 to 25 times annual income20 to 25 times annual incomeverify wellness screening and programssetup automatic savings withdraw8 month emergency fundcredit utilization rateLong Term Care Insurance Gay Rightspermanent life insurancemarriage financial responsibilityCD'sno late fee debt freeno retirement funds for down paymentaffordability740 credit scoredear suzeWall Streetcommunity college19 years cash flow problemPersonal FinancerefinanceForbescollege studentpercentage men widowed 75-84Suze Ormanhealthy retirement weight2015 financial roadmapOne Wallet At A Timemonthly dental insurance premiumcharges on credit cardAARP Social security calculatorSatisfyingSuze Orman's Money Wars30 year mortgage money-aware childMoney-Savingfocus on needsmeet monthly graduationprotect and provide for minor child Invest for savings growthswitch to spouse coverageGoodbyepremiumlower interest rateBeautylousy investmentadd teenis it kind?Student DebtARMcalculate dependents annual income needskeep a scheduleexercise reguarlyheartacheCiti Simplicity Card 3 bucket approachpresident Obamamultiple lendersemployer funding HSASuze Orman spouse Kathy TravisCommunication Skills eight month living expense best loan deal dangerous money seasonopen enrollment review automatic withdraw to savings long term goalfinancing car standard deduction University of Floridapay down student loan debtgrandchild summer job IRA contributionpay more than minimumstrained relationshipFICO at least 720budgetgay marriage ban end Florida credit unionlive below your meansschedule vacationcar leasingdon't cover cosmetic dentistry401(k) Contributionsbuy down back-to-school budgetSelectQuote.comno waiting periodsuccessreduce monthly paymentcut monthly cellular billreal estate marketgift not loandangerous retirement planholiday spendingovercome financial fearsidentity fraudCivil Rightsadjust allocations age appropriate choreCredit Card Rate Increase2016 adjust estimated taxprotect loved ones no splurge letter to suzereplace permanent life insurance with termretirement planvalentines dayFHA loan feesAshley SpringerInterestNew american Dream children under 18staycationFederal ReserveHigh FICO Score = Better Rateknow before you oweloan big picture secured carddebtterm insurancesame sex marriage band end FloridacommissionsLifestylenot gender specific long term carepaid in fullwomen long term care3% debt transferred HolidayPBS Specialsave money40% toward financial goaldon't defer interest paymentsBankruptcyrequire chore in exchange for allowanceAARPPay Off Debt Before Retirementwould you decline a bonusDurable Power of Attorney for Health Careno fee transferSuze Orman Scholarshipadult childrenapproved medical 100% tax-freehigh deductible health care plandepreciating asset don't ignore open enrollmentpay 100% cashrent vs buyget over life insurance phobiadon't do five year car loanvalue moneyno private loansbill paying prioritiesinitial tax break Holiday Shoppinghigher monthly paymentmaintain standard of livingConventional loan PMIeliminate credit card debtoverspend on nights outTeachfinancial argumentscommitdon't extend mortgage worst financial mistakeco-sign College of Veterinary Medicinehome related tax break bonus store credit cardshousing marketVital Documentsnot enough life insurancesocial securityGracebecome member television hostraising interest ratespay high rate off firstunsubsidized Stafford loanEmployer Matched Contributionretirement accountslower premiumsavings pleasurehealthy gumsreduce interest ratesocial security not going brokeEasy Life Insurance origination feescnbc alarm clockrepay student loanssave doctors in networksavingsget the most out of social security let them have 50% controlHDHP max benefit covered10% donate to charityplanpurely financial standpointteach your child good money habitsback door Roth IRAno private loanFixed Rate MortgageLong Term Care shoppingspeak new goalhome ownershiphighest possible benefitfinancial fearsstay positiveFederal Funds RateTelepicturespowerful3 step financial road maphigh credit score discountfamily save at least $100 monthlymarriage inequalityLegal Guardianpaid vacationFinancial Advicesocial security never insolventStaffords this year have a fixed 6.8% interest rateIRA contribution gifted moneypaying for collegeincrease retirement contribution ratedon't blow tax refundinsurancecompare monthly expensesis it true? 10 year repayment plan FRAlife insurance name trust as beneficiarySelfishFinancial CliffLTC shoppingfinancial goal phrasewomen live longermortgage brokerkids schedule paymentsunder 18 financial giftiffy income20 year level term Federal PLUS loanavoid burn out8 month safety netpush yourself to save more for retirementemergency fund savingsaffordable premiumfile asapdon't spend itemized deductionrolloverignore 6 month grace period Financial Awarenesshigh down paymentborrowing plan kid borrow firstreduce withholdingmax employee matchreal estate mistakestax refund fraudFinal Goodbyesecure creditautomatic paymentraising mortgage rates Long Term Care premiumshealthy teethonly refinance if it paysFree Debt Eliminatordebit cardhome buying budgetprescription tierStock Investmentsburn outspecial saving accounttaxesworkaholic!00% tuition paidcostly insurance mistakeHow To Build CreditRoth 401(k)bad decisionsno negativityderailed plando not pay allowance for good behaviorraise insurance deductiblefocus on new truth Giftsstudent loan repayment estimatorcan you afford ithome loan credit score below 740 better termsUniversity of IllinoisAuto Savings better loan ratesaccelerate dental workhealthy youwomen longer life spanETF'sno life insurance financially irresponsiblehome buying mistakesinterest capitalizationhigher insurance deductibleclosing disclosurebe good examplegrandparent IRA contribution sidelinedsocial workYoung Adult Fiscal ResponsibilityCNBCget health insurancelearn good financial choicesteach importance of helping othersteens and moneylower mortgage interestMinor Children stretch out haircut appointmentsfile taxes quicklydream schoolrising home pricesthree year car loanJose Rodriguezbuy home you can affordshop online guaranteed level term policynear historic lowsfraudulent returnborrow each year, capitalization is going to pile up verify retirement plan with HR or plan sponsordon't charge a pennymoney vowsincrease retirement savingsSandy Hook Elementary School15 year mortgagecreate new truthAmy LacyetMust Have DocumentsRichtitle insuranceFICO Scoreengaged in financesinsurance yearly reviewone annual feeone credit cardhealthy retirement blood pressureWill20% equitybest interest ratesbe true to yourself4 Must Have Documents provider of financial supportno apologychildren's bookretirementSuze changed my lifecar buying mistakestoo expensive schoolhome insuranceinsurance mistakeadvice for college graduatescredit managementInflation Benefitannual cost of living adjustmentshort term goal healthy aging Student Debt Crisisat worst still pay 75% benefittake actionoverspend on dining outdon't buy wantsconfident of solutionRevocable TrustLove8 Rulesmake saving a pleasurebig results Holiday Seasonoverspend on giftsbe kind to yourselfThe Suze Orman ShowHDHP's are good for youGay CouplesCredit Card Interest RateMass MutualRevocable Living Trustno interestshorter payback periodlow down paymentpay interest while in schoolcost of capitalization calculatorescrowlong-term care premiumswrite new goalCommencementbalance transfer do you need life insurancezero rate transfer dealsstudent loan repayment planclosing feesMortgage Credit Availability Indexlowest cost fund optionCory Bookerfull retirement ageSuze is my biggest mentorlife insurance2017 Taxesloan is giftlower overall drug costroth iraPrime Rate Rise 2015Death Benefitfiduciarybest interest of investorautomate student loan paymentsdental insurance LTCi ASAPreferrals buying car 2016Post-DivorceEric Dodge bad retirement planningemployer offered life insuranceFinancial Power of Attorneyteensfinancial aidmental healthcontribution Bill and Pennyface your financial fearis it necessaryCOLAStudent Loanearn allowanceresponsibleSpendingfinancial concernMoneyretirment savingsInfluentialsconsider roth 401(k)loan necessitydental discount planVeterinary Schoolleave a legacylow credit scoreExhibitionget credit cardSuze approvedHDHP/HSAForbes Top 10mortgage interest tax deductionNew York Lifeearn more on savingshigh FICO scoreWarner Bros Television Groupdon't derail retirement savingsbuying a cartax ID theftprotect dependent pay credit debt ASAPfinancial independenceForeclosureSandy Hook PromiseAdequate Auto and Home InsuranceNewtownloved ones dependent on incomeenjoy saving ritual scheduleFICO credit score credit card mortgage15-year refinance deal6 month waiting periodpublic service loan forgiveness programage appropriate goalsprofessional advisorprotect your familystudent loan repaymentcredit cardmobile apponly offered while employed raise deductiblesBankquick closingLTCPhyllis Shelton expert long-term caredoctor no longer in network

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel