Looking To Start An Emergency Fund? Here’s Where A Finance Coach Says To Realistically Start

“An emergency fund is there to really help you get through unexpected falls and life pivots,” Kara Stevens, founder of The Frugal Feminista, tells xoNecole. “I like to call it a ‘rainy day saving for a sunny day.’” In Stevens’ example, these rainy days can range from setting aside money to seize opportunities that contribute to your professional and emotional well-being. For instance, if a job opportunity arises that requires relocation, having an emergency fund allows you to make the move without resorting to debt. On the other hand, such funds can also come in handy when you’re in need of a break from life’s pressures and stresses.

“Sometimes life gets out of control emotionally, and you just need your own weekend retreat or a month-long sabbatical, you can fund those as well,” she says. “The emergency fund is really there to support you when you have external pivots and changes and when we have internal ones as well.”

What sets a traditional savings account apart from an emergency fund is having planned expenses and purchases aside from unexpected ones. “A traditional savings account is there for you to use towards buying and purchasing, is something that you have actually planned for and prepared for, without you having to use your credit card to subsidize the costs of it,” Stevens explains. “On the other hand, an emergency fund is something that you want to avoid touching.”

Without an emergency fund, one might resort to maxing out credit cards to cover their basic needs or borrowing money. This can lead to high-interest debt, creating a cycle that becomes challenging to break. An emergency fund provides a self-funded safety net, reducing the need to rely on credit in times of crisis.

Although the thought of creating an emergency fund may feel daunting, planning ahead of hardship strikes can be the key to financial peace in the future. There are many rules of thumb to have three months, six months, and 12 months worth of savings for an emergency fund, but Stevens has a different approach.

“There's an emotional barometer: some of us can live with less money than more money,” she explains. “It's also important to know what your life circumstances are to your total financial landscape and understanding for you to think about what emergency fund amount works for me.”

Cost of living in your city, life transitions like unemployment, giving birth, graduating from college, household size, or moving to a new state are all factors to keep in mind when planning out the amount of money necessary to prove comfort during your time of need. Additionally, implementing a savings system that automates your savings bi-weekly or monthly takes the guessing game out of the practice.

“I would make sure that out of every check, before I could touch it, that the money was automated and put into one of my emergency funds that was hard for me to get to. So I did it in a systematic way without having to deal with forgetting or the temptation of touching it.”

While the process of saving seemingly starts with the money you put aside, Stevens says that the spiritual and emotional aspects can help bring a fresh perspective to the process. To overcome the mental blocks that may arise on your saving journey, she recommends implementing money mantras and affirmations like “ I am a money magnet,” to shift your outlook on putting money aside.

“Immerse yourself in the world that you want to grow in," she explains. “Listening to a podcast from someone whose story resonates with you is a way to put you into the energy of saving and being around people and ideas that really reinforce what you're trying to do.”

When we redefine our relationship with money, we reshape our outlook on finances and create a better future for us today. “Your mental environment with what feeds into the world of wealth is important, especially if saving wasn’t considered something that people in your family do or were mocked for.”

While we can’t control the particular life circumstances we grow up in, we can set our future selves up to have peace of mind for a distant (but possible) rainy day.

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