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

mortgagebad decisionsForbes Top 10HDHP'sEmployer Matched Contributionterm life insurance50 over 50small changes credit reportlower ratepublic service loan forgiveness programOne Wallet At A Timenew carprotect dependent Bankbe good exampleForbesJose Rodriguezsidelineddangerous money seasonbuy home you can afford8 month emergency fundExhibitionbudgetLTCi ASAPstay positiveis it true? responsible4 Must Have Documents 3 step financial road mapFinancial Solutions For Youinsurance yearly reviewhome buying mistakespositiverefundcollege studentmoney-aware childPay Off Debt Before Retirement15-year refinance deallower overall drug costdental insurance Veterinary Schoolretain separate credit cardsroth iraPrime Rate Increasecar buying mistakespush yourself to save more for retirementrising home pricesincrease retirement savingsnot gender specific women longer life spanCredit scoreletter to suzeno fee transferterm insurancebuying a carspecial saving accountstudent loan repaymentknow before you oweEasy Life Insurance lower premiumretirementLovelow down paymentmoney vowsFinancial Gift Cliffwomen long term careritual scheduleEmergency Savingscredit cardcost of capitalization calculatorAlarm Clockdon't cover cosmetic dentistrydon't buy wantsfinancial concernretirement planhealthy retirement weightSandy Hook Elementary SchoolStudent Debtno late fee school secure creditautomatic paymentalways use all paid time offpay credit debt ASAPsave moneyAdequate Auto and Home Insuranceexercise reguarlyfile asaphigh premiumssummer job match income 20% equityincrease retirement contribution ratebest loan deal Financial Educatordo you need life insurancedoctor no longer in networkearn allowanceclosing disclosuremanage student loansraise deductiblesmortgage brokerMoneyHeartno retirement funds for down paymentgrandparent IRA contribution 40% toward financial goalBill and PennyStaffords this year have a fixed 6.8% interest ratebecome member SelectQuote.comcan you afford itcompare monthly expensesautomatic withdraw to savings 20% down paymentchildren under 18identity theftcar loanbetter loan rates401(k) Contributionsstudentteens and moneymarriage financial responsibilityInfluentialsone annual feeFinal Goodbyeemergency fund savingsbuy down do not pay allowance for good behaviorholiday spendingreferrals switch to spouse coverageescrowadjust allocations Young Adult Personal FinanceWarner Bros Television GroupFundsHDHP overcome financial fearssocial security never insolventcommunity bankpercentage men widowed 75-84Save Us MoneyGiftsdepreciating asset age appropriate goalsUS Tax Codefile taxes quicklyHSA tax savingsLong Term Care shoppingGiftlet them have 50% controlCory BookerAshley Springerpurely financial standpointfraudulent returnconfidentfinancial independencegift grandchild IRA contributionwives should be involved in retirementEric Dodge Retirement Savingshome insurancereduce withholdingreduce interest rateUniversity of Floridaoverspend on giftsInterestpremiumprotect loved ones Durable Power of Attorney for Health Carebreakdown projected monthly housing costFinancial Advicejuggle multiple financial goalsemployer offered life insurancephysical healthdon't extend mortgage secured cardproperty taxbest interest rateslearn good financial choicesprovider of financial supportFinancial Cliffkeep a scheduleAARPMost Influential Celebrities Listallowanceface your financial feardeath benefit 20 to 25 times annual incomeoverspend on dining outapproved medical 100% tax-freeincrease emergency savingsUniversity of Illinoiscontribute household expenses be kind to yourselfreal estate marketdoctors in networkdon't defer interest paymentsis it necessaryOverspendingInvest for savings growthBankruptcyGay CouplesAccuQuote.cominsurance mistakeclosing feeslife insurancecommitCredit Card Interest Ratedon't do five year car loanLong Term Care premiumsonly refinance if it paysshop online guaranteed level term policyemergency fund same sex marriage band end Floridaloan necessitylow-cost index mutual fundpay high rate off firstidentity fraudlong term goalteensunder 18 financial giftSandy Hook Promiselow credit scorerepay student loansfocus on new truth taxesis it kind?Prime Rate Rise 2015max benefit coveredHow To Build Creditgrandchild summer job IRA contributionbill paying prioritiesPost-Divorceunsubsidized Stafford loancredit managementborrowing plan New american Dream Federal Funds RateCiti Simplicity Card Financial20% down payment avoid feespublic service career student loan repayment Suze Orman spouse Kathy TravisLong Term Care Insurance origination feesloan is giftno tax on withdrawlsleave a legacyget credit cardsocial workHoliday ShoppingMass MutualHolidaytraditional vs roth 401(k)loan big picture Suze Ormanunexpected expenseplanmortgage disclosuremonthly benefit Conventional loan PMIautomate student loan paymentsPBS SpecialWashingtonpay interest while in schoolcredit unionsave ignore 6 month grace period reduce monthly paymenthealthy aging 2016 adjust estimated taxBaby Boomersstore credit cardsPhyllis Shelton expert long-term carejanuary billsrolloverteach importance of helping othersteach your child good money habitsInfluential CelebritySuze changed my life2015 record year car salesFree Debt Eliminatordebtdon't ignore open enrollmentno private loanat worst still pay 75% benefitdental savings planbetter termsavoid burn outsuccessAARP Social security calculatorone credit cardkids schedule paymentspaid in fullconsider roth 401(k)Motherno life insurance financially irresponsibleuniversal college accesssavings pleasureUrbana-ChampaignLTCloved ones dependent on incomereal estate mistakesfull retirement agehome budget after tax costvalentines day10 year repayment plan lowest cost fund optionalternative FICO scorecnbc alarm clockfinancial fearsprotect your familyNew York Lifebig results 8 month safety netcut monthly cellular billtax refund fraudRoth 401(k)charges on credit cardoverspend on nights outcollege graduateyours, mine & oursSuze Orman's Money Warsemotional stakesStock Investmentslower mortgage interestAuto Savings HDHP's are not badThe Suze Orman Showhigh FICO scoreCOLASuze Orman ScholarshipheartachepowerfulFiscal Responsibilityhome related tax break bonus life insurance name trust as beneficiarywomen outlive menfamily save at least $100 monthlydangerous retirement planwaive home inspection bidno negativitySuze is my biggest mentorhousing marketlong-term care premiumsget over life insurance phobialoan no longer than 36monthsRichLifestylemultiple lendersresponsible with moneyFICO Score20 year level term balance transfer borrow each year, capitalization is going to pile up 3 bucket approachco-sign higher insurance deductibleMortgage Credit Availability Indexswitch to roth 401(k)no interestcostly insurance mistakepresident Obamastudent loan repayment estimatornear historic lowsiffy incomeclosing costs 2% of loanadvice for college graduatesmaintain standard of livingCredit Card Rate Increaseincentives for health care wellness screeningdon't charge a pennyrefinanceCNBCworst financial mistakeraise insurance deductibleanticipated salarythree year car loanpaid vacationFRAno splurge social security not going brokepay 100% cashsetup automatic savings withdrawretirement accountsmax employer matched 401(k) contributionForeclosureget the most out of social security federal student loan deferment Teachdon't blow tax refundadd teen!00% tuition paidcontribution Financial Power of Attorney3 savings buckets verify retirement plan with HR or plan sponsorderailed plancar leasingsocial securityemployer funding HSAfinancial goal phrasemarriage inequalitydon't derail retirement savingsbad retirement planningretirment savingstax ID thefttelevision hostChanging Lives401KETF'sLTC shoppingCPI-Wshort term goal title insuranceTelepicturesdon't use allowance as bribeStudent Debt Crisisdream schoolstandard deduction back-to-school budgetverify wellness screening and programshealthy retirement blood pressure2015 financial roadmapCollege of Veterinary Medicine19 years cash flow problemGracehigh deductible health care planrequired disclosurequick closingpreexisting condition not coveredHDHP/HSAinitial tax break require chore in exchange for allowanceFICO at least 720debit cardrent vs buybe true to yourselfhighest possible benefitdear suzegraduationprotect and provide for minor child meet monthly lousy investmentMoney Markettake actioncut monthly cable billSuze approved2016 adjust withholdingcomparison shoppingFinancial Awarenessstudent loan debtnot enough life insuranceinsuranceget health insuranceFinancial Systemlong term careMarlo Thomasmental healthmortgage interest tax deductionage appropriate choreFHA loan feesSchool of Social Workinterest capitalizationsame-sex marriageannual cost of living adjustmentopen enrollment review home ownershipgift not loanzero rate transfer deals2017 Taxeslong-term care Beautycouple financespermanent life insurancepoint cost offset by savingsspeak new goalHoliday SeasonRevocable Living Trustlive below your meanscalculate dependents annual income needsallowance taskenjoy saving ultimate compounding gift3% debt transferred pay down car loan10% donate to charityreplace permanent life insurance with termGoodbyeIRA contribution gifted moneyCivil Rightspercentage of women widowed 75-84better loan dealsnegotiate points with bank or sellerAmericans don't use all paid vacation timeFinancial Awareness Video FestivalMoney-Saving8 Rulesconfident of solutionmax employee matchmonthly dental insurance premiumcommunity collegeback door Roth IRAgift up to 14,000home loan credit score below 740 6 month waiting periodpay down student loan debtstretch out haircut appointmentsvalue moneyfinancing car adult childrendebt freeno sneaking in feesstandard ratepaying for collegeSpendingchildren's bookWall Streetstudent loan repayment planonly offered while employed Satisfyingwomen live longerhome buying budgetdeath benefit needs for familywould you decline a bonusmake saving a pleasureRetirement Incomebuying car 2016mobile appfour steps to retirement savings Amy Lacyetprescription tierbuy homeCommencementis it necessary?savingsdon't spend financial argumentsHDHP's are good for youGay Rightspay more than minimumpay off debtfocus on needskid borrow firstno waiting periodgay marriage ban end Florida Communication Skills interest on student loanswrite new goalitemized deductionStudent LoanNewtownFICO credit score credit card mortgagecreate new truthdental discount plan


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