Your Ultimate Guide to Starting an Emergency Fund
Life can be expensive. And if the unthinkable happens, and you’re suddenly unemployed or have unexpected expenses to cover, it’s wise to have some money set aside to use in case of an emergency.
A rainy day fund can help maintain peace of mind, so you can be confident that you can manage unexpected events without impacting your mental health.
From home repairs to medical bills, unplanned expenses can crop up when you least expect them. So it’s best to be as financially prepared as possible—in other words, making sure you have good financial well-being and can weather any storms that may come your way.
Don’t worry if you don’t have much (or anything at all) in your emergency savings pot at the moment. According to Bankrate’s 2025 Emergency Savings Report, 3 in 5 Americans (59%) are uncomfortable with their emergency savings. That’s why we’ve created a step-by-step guide to help you start putting money aside for your future.
The good news is, you don’t need to be a personal finance expert to start building an emergency fund. Here’s everything you need to know to meet your financial goals.
What is an emergency fund?
An emergency fund is a financial safety net to cover unexpected expenses or sudden loss of income, as a result of job loss or illness.
The fund can be used for a variety of financial emergencies, from car repairs to cash flow issues.
What is a good starter emergency fund?
It’s generally advised to have three to six months’ worth of expenses in your emergency fund, but how much you save depends on your situation. For example, if you’re the main provider or you have multiple dependents, you may decide to have more in your pot.
This is sometimes known as the 3-6-9 rule:
- Three months is recommended for those with a stable income and little to no debt.
- Six months is a good middle ground for an emergency fund, suitable for those with some debt and dependents.
- Nine months might be wise if you’re the main provider, have higher debt, or have complex financial situations.
We know it might sound like a lot of money. But don’t be put off if that feels too much. Anything you can put aside is beneficial, and everyone has to start somewhere when it comes to savings.
Why do you need an emergency fund?
There are many benefits to having an emergency fund.
If you suddenly find yourself in a financially unstable situation, it’s important to have enough money to cover a few months of expenses. This will help secure the safety and happiness of yourself and your loved ones.
Having an emergency fund will also provide you with financial security and stop you from making hasty financial decisions and potentially racking up unnecessary debt when you suddenly need some cash.
Where should you put your emergency savings?
There are plenty of options for where to put your cash. It will depend on your circumstances and how quickly you might need to access money in an emergency, as some lock money away. You can also use a few different options to help you get the best balance between accessibility and interest-earning potential.
- A high-yield savings account will pay high interest rates on your savings. Do your research to find the best deals, and be ready to switch providers if interest rates drop. These bank accounts sometimes also offer welcome bonuses to new customers, which means you can add more to your pot.
- A money market account is essentially a mix between a checking account and a savings account. They tend to offer good interest rates and limited withdrawals from your savings. So if you can be confident you won’t need immediate, easy access to your savings, this might be a good option.
- A certificate of deposit (CD) account offers a fixed rate of return in exchange for locking your money away for a set period (e.g., 18 months). Often, there will be penalties if you need to make early withdrawals, but these will differ between accounts, so do your research.
- An easy-access checking account is a good option if you want to be able to access your money quickly. Some banks have savings pots within their checking accounts to help you separate money for different uses. These will often have smaller interest rates than other options.
Wherever you decide to put your money, make sure it’s safe. Opt for banks and credit unions that are members of the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA).
6 steps to build an emergency fund
1. Understand your current finances
To make smart financial decisions, you must understand your current finances. That includes the amount of money you currently have in your checking account balance and other bank accounts, as well as any debts you owe, including credit card debts.
It’s also crucial to audit your monthly expenses. This way, you can fully understand what your outgoings are each month and understand what you can cut back, if needed, such as streaming subscriptions or gym memberships. It’s also useful to understand how much you spend on miscellaneous transactions, including ATM withdrawals.
If you’re in a relationship, be sure to include your partner in your calculations, too.
2. Determine how much you can save
It’s important to set a savings goal, so you know what you’re working towards. But equally, it’s wise to be realistic about how quickly you can get there.
Think about the 3-6-9 rule to set out an ideal amount to aim for. Then work out how much you can realistically save each month to meet that target.
This will mean assessing your outgoings and expenses against your monthly income, considering what you can cut back on, and how much you can put aside.
3. Choose saving strategies that work for you
There are lots of ways to save money, from strict budgeting to paying off debts. When it comes to emergency funds:
- Set a budget—and stick to it. Be disciplined and share your goals with others, so they can support you.
- Set up automatic transfers from your regular salary to your savings accounts. Do this as soon as you get paid, to avoid the temptation to spend it.
- Monitor interest rates and, if you can get a better deal elsewhere, move savings accounts to maximize the return on your savings. Make sure you won’t incur any penalties or fines before moving money, as this could undo any benefits.
- Commit to saving windfalls, which means unexpected income such as a tax refund, bonus, or inheritance. Save as much for any windfalls as possible, and immediately.
- Save any small change by putting physical coins in a jar or saving digitally.
- Pay off any outstanding debts, starting with high-interest credit cards. This might seem counterintuitive, but it will free up money for you to put into your savings.
4. Find a good place to keep your savings
We outlined bank account options earlier in the article. Personal finance is personal, and what works for one individual might not be the best option for you.
Whatever you decide for your savings plan, it’s wise to keep your emergency fund in a separate account or savings pot, so you aren’t tempted to spend it. And remember to use an FDIC-insured bank account for your savings to protect your money.
5. Stay accountable
Saving takes time and, let’s face it, can be frustratingly slow.
Keep the momentum going by celebrating milestones such as completing six months of consistent saving or reaching a specific figure. You can celebrate these yourself, or share your wins with a loved one who can also share your successes.
6. Planning when and how to use it
Once you’ve built up a decent-sized emergency fund, it will be tempting to dip into your savings. However, remember how long it took you to save the money. It’s much easier to spend money than to save it.
Try setting some ground rules for yourself that will help you spend the money wisely. Perhaps there are only certain situations you want to use the money for. This is especially important if you’ve got a family and dependents, when everyone agrees what reasonable living expenses look like, it will help keep spending decisions harmonious.
Do remember to be flexible as well as disciplined. Stuff happens, and it may not be an unexpected expense you’d bargained for, but have the confidence that you can always get your emergency fund back on track with a little hard work and determination.
How you can use crowdfunding to start an emergency fund
Crowdfunding is an excellent way to boost an emergency fund and help reach financial security. Setting up a crowdfunding campaign is easy on GoFundMe and can complement the other saving techniques you’re using to hit your emergency savings goal.
Start by setting up a fundraising campaign with a compelling fundraising story and share it on social media to reach as many people as possible. This will allow friends, family, and your network to support you and contribute to your emergency fund.