How to build an emergency fund from zero
Start with a $500 cushion, then grow toward three to six months of essentials without stalling the rest of your budget.
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An emergency fund is money set aside for surprises: a car repair, a medical bill, a gap between jobs. Without one, a $700 problem often turns into a credit card balance that costs far more over time.
Step one: a starter cushion
Aim first for $500 to $1,000. That covers many common emergencies and gives you breathing room. Even $20 a paycheck gets you there within a year.
Step two: one month of essentials
Add up your needs only: rent, utilities, groceries, insurance, transportation and minimum debt payments. Saving one month of that amount is a major milestone.
Step three: three to six months
Households with one income, variable pay, or kids often aim for six months. Dual-income households with stable jobs may be comfortable with three.
- Keep it in a separate savings account so it is not mixed with spending money.
- Automate a transfer on payday so saving happens before spending.
- Put windfalls such as tax refunds or bonuses toward it until you hit your target.
Check your emergency fund target
The planner's Review step shows how many months of essential expenses your emergency fund covers.
Check your emergency fund target →General educational information, not personal financial advice.