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Financially Fit

Emergency Fund—Start Small, Think Big


Many people wonder how they can build an emergency fund when they’re trying to pay off their debts. It isn't as hard as you might think. The strategy is to start small, change a few habits, and change your mind set.

The first question often asked is how much does one need for an emergency fund. The answer is that it changes from person to person. Between one and three months of your living expenses is an ideal place to start, but some money experts suggest seeking to stash away up to one year’s worth of living expenses.

If you're starting from scratch with your emergency fund, begin by saving one month’s worth of living expenses while paying the minimum on your credit cards. When you have that first month of emergency funds started, turn your focus to your credit card debt and pay more than the monthly minimum. Once the credit card debt is paid off, go back to building your emergency fund.

If your credit card debt is very high and can’t be paid in full within a couple of months, then alternate the extra payment every other month: The first month, add to your emergency fund and pay the minimum on your credit cards. The next month, pay more on your credit cards and skip the deposit to your emergency fund, etc.

CES Credit Union wants to assist in your financial success by passing along helpful suggestions. Here are five ways to hopefully help you boost your emergency fund and change savings habits for life:

1. Treat savings as a bill. Figure out what you can afford to save each month and stash away $75, $50, $25, or even $10 a month. No matter the amount, it adds up and can become habit-forming. As your financial situation improves, increase the amount.

2. Live one raise behind. When you get a raise, don’t begin spending more. Instead, apply the extra amount to your emergency fund.

3. Automate it. Set up an automatic transfer to your emergency funds account. When the credit union receives your direct-deposited pay check, you can have a portion of it put directly into your savings or emergency account. Out of sight, out of mind, but you know it's there if you really need it.

4. Give savings a garage-sale boost. Go from room to room in your home and purge stuff you no longer want and need. Then schedule a garage sale. You can take all the cash you earn and drop it into your emergency fund account. Both your house and your savings will look better.

5. Think of it as a life jacket. If you can't find that initial spark to get started, ask yourself how you'd pay your bills if you lost your job tomorrow. Having an emergency fund will help you keep “your head above water.”

Remember: The professionals at CES Credit Union are ready to help with all your savings needs. Call us at 740-397-1136 to set up short-term and long-term savings vehicles that fit your needs.

Copyright 2018 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.

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