By Gregg Gonzalez, CFP®
Life happens. And when it does, an emergency fund is your financial safety net. Whether it’s a surprise medical bill, car repair, or sudden job change, having cash set aside gives you confidence and protection against the unexpected.
If you’ve never built an emergency fund, or you’ve dipped into yours and need to rebuild, don’t worry. Today is the perfect day to start fresh.
Here’s why it matters and how to get going, step by step.
What Is an Emergency Fund?
An emergency fund is a stash of money reserved for unplanned expenses. It’s not for vacations, birthday gifts, or new furniture, it’s for real financial curveballs, like:
- Medical or dental emergencies
- Major home or auto repairs
- Job loss or reduced income
- Emergency travel to help family
🛑 Think of it as your “do not touch unless you really need it” account.
Why You Need One (Even If You’re Nearing Retirement)
Many people in their 50s and 60s focus on long-term savings (like 401(k)s or IRAs) which is great. But those funds are usually tied up in investments or retirement accounts, not ideal for quick access in a crisis.
An emergency fund:
- Keeps you from tapping into retirement savings too early
- Helps you avoid high-interest debt like credit cards or loans
- Increases confidence in uncertain times
💡 Even retirees benefit from emergency funds to protect fixed incomes and avoid withdrawing investments during down markets.
How Much Should You Save?
The standard rule of thumb is:
- 3 to 6 months of essential expenses
If that feels overwhelming, start smaller. Aim for $500 to $1,000 as a first milestone. Then grow from there.
To calculate your ideal fund size:
- Total your basic monthly expenses (housing, utilities, food, insurance, etc.)
- Multiply by 3 or 6, depending on your situation
- 3 months = dual income, stable job
- 6 months = single income, self-employed, nearing retirement, or on a fixed income
Where Should You Keep It?
Emergency funds should be:
✅ Safe – not invested in the market
✅ Accessible – easy to reach in a pinch
✅ Separate – not mixed with everyday spending
📍Best options:
- High-yield savings account
- Money market account
- Credit union savings
Avoid keeping it in cash at home or locked in a CD you can’t touch for months.
How to Start Your Emergency Fund Today
You don’t need a lump sum – you need a plan.
- Open a separate savings account just for emergencies
- Set a small, realistic savings goal (e.g., $500)
- Automate your contributions – even $25/week adds up
- Use windfalls wisely – tax refunds, bonuses, or cash gifts can jump-start your fund
- Track your progress and celebrate milestones!
🎯 Remember: It’s not about perfection. It’s about preparation.
Final Thoughts
You can’t prevent life’s surprises, but you can prepare for them. An emergency fund is your first line of defense against debt, financial anxiety, and disruption to your long-term goals.
Start small. Stay consistent. And know that every dollar you set aside is a step toward greater confidence.
Need help building a complete financial plan for your stage of life? RetireStrong Financial Advisors can help you create a strategy that includes emergency savings, retirement income, and confidence. Let’s chat!
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
