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Why You Need an Emergency Fund and How to Get It

Emergencies are a fact of life. When you’re faced with an expected event—from a broken bone to a job layoff—you can be ready. An emergency fund is a stash of money set aside to cover financial surprises life throws your way—events that can be stressful and costly.

Last year, Mitch and Jenn had a string of bad luck. Mitch broke his leg in a skiing accident, Jenn’s car broke down requiring major repairs and their home’s aged roof decided to fail right in the middle of a major storm.

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The timing for all of this wasn’t ideal—four weeks before Christmas. The financial and emotional toll of these events continues to be huge, but nothing like it might have been if they hadn’t been diligently building their Contingency Fund, more commonly known as an emergency fund.

An emergency fund creates a safety net for a home and family. This way you are less prone to experience a disaster when an emergency comes your way.

Mitch’s health insurance is covering most of the costs of his surgery and follow-up therapy. Still they’ve had to come up with more than $2,400 to cover his deductible, co-pays, and prescriptions. The car repairs were just shy of $2,700—not surprising given the car’s age and 140,000 miles.

It was the roof that really threw them for a loop. The estimate to repair it—with no assurance that said repairs would last for longer than a few months—was $750, with a new roof coming in at an estimated $12,000.

Suddenly, their healthy $18,000 Contingency Fund didn’t look quite as massive as it had only days earlier. All of these financial emergencies were of top priority. None could be ignored.

The medical bills and car repairs reduced Mitch and Jenn’s CF to about $12,500. They opted for the roof repair of $750 to buy themselves time to save for a new roof.

So far, the roof repairs are holding well. They’ve had time to get additional estimates and it looks like the cost will be closer to $10,000, which given the circumstances, comes as good news.

Mitch and Jenn are crash saving so that when they replace the roof, the cost will not deplete their Contingency Fund. And they’re committed to continue saving like that to restore it back to $18,000 as soon as possible.

Now, I’m going to predict what the majority of my readers are thinking about now:

Sure, Mitch and Jenn are wealthy so of course they have money to save. Or, they’re lucky because they have two incomes, we have only one. Or, must be nice but what about those of us who are unemployed, unhealthy, deeply in debt or [insert excuse of choice here]?

As long as you see building your Contingency Fund as optional, there will always be something more pressing to take priority. And, by the way, Mitch and Jenn are anything but wealthy. They’ve embraced frugality as a top priority in their lives, caring well for every dollar that comes into their lives, putting savings as a top priority.

Need specific reasons to grow your CF? Here they are. Learn them well, then believe with all your heart that something on this list is coming your way:


I am not an advocate of running to the doctor for every little thing. But when you or someone in your family is really sick, involved in an accident or contracts a horrible disease—you need to be prepared. Insurance only goes so far these days.

The dreaded pink slip

Getting a pink slip is never fun and when it comes out of the blue with no notice, it will be shocking. You need a way to pay your bills until you get another job.

A job with distance

Your next job may be four states away. Moving will not be cheap. Those are expenses you may have to cover yourself, at least in part. The last thing you want is for that new job to sink you further into debt.

Serious breakdown

Sure you can ignore all the warning signs of impending car trouble, but when your car gives up and breaks down, you’ll have a problem. If you think auto maintenance is expensive, wait until you see the cost of repairs.


Natural disasters—who knows what form this type of emergency will take? There is no place on earth immune from natural disaster, many of which come without much warning. That’s why you need to have money stashed away, just in case.

Final call

Who wants to plan ahead for mourning? Not me. But knowing I have money stashed in my CF for when bereavement requires travel and more, means that I don’t have to think about it now. I’m prepared.

Just do it

I understand that these days the cost of just about everything is soaring. These are tough times to find money to save. But do you really have any options? If your current lifestyle is sucking up every last dollar of your income thereby putting you and your family at risk, it’s time to make changes.

Start small

While you need a big healthy Contingency Fund, that’s not going to happen overnight. Your goal is to have the amount required to pay all the bills and keep food on the table for six months without any paychecks. One-half of your annual net income is a huge number when you think of it sitting in a savings account. But don’t focus on that number.

Instead, start by saving $500. Then reset your goal to $1,000. Now you’re on your way. You’re catching the savings bug. Soon you will reach $2,500. Then $5,000 will be in view and you’ll be on your way.


That’s the way to do it. But you’ll never reach your goal until you get that first $500 safely tucked away in a savings account.



3 Ways to Cut Your Bills by 10 Percent or More

Getting Back to Normal After a Disaster

How to Save $1,000 Cash Painlessly

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2 replies
  1. Debbie says:

    I second the importance. I have excellent homeowners insurance but between the deductable and what wasn’t covered, I had to come up with $9,000 after Tropical Storm Irma came through Atlanta. Three huge trees down on the ground and two more that had to come down for safety, the entire length of yard new fence, water in a wall and new roof. My insurance covered $15K. One never knows when there is suddenly going to be an emergency and I got off lucky. Other than a damaged roof and small leak of water into the wall, my house was okay and I got to stay living in it. This is when I switched from having a 3 months saving to 6 months of emergency savings.

  2. Belle Mieloch says:

    Well said Mary. We have a fund and I had saved to have my sofa and loveseat recovered. Cheaper than buying new. While waiting to get it done I noticed a crack in our shower wall. $8000,00 dollars later it was fixed. Furniture was done lees than $2000.00. Ok now to get back on track. My husband had to have new bridge work done. Well my fund saved me and we still had money left. Also at this time my property taxes came due. Then car insurance. I will never be with an emergency fund. And I thank you for all your advice in last 30 years


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