Start Small to Build an Emergency Fund

With rising prices on everything from groceries to gas, saving money for an emergency fund might feel impossible. But financial experts say that even setting aside a small amount can help prevent a financial crisis.

A Bankrate report from 2024 found that 27% of U.S. adults have no emergency savings at all. Another 29% don’t have enough to cover three months of expenses. Ideally, financial advisors recommend having enough to cover six months of costs—an amount that can protect against unexpected bills, car repairs, medical emergencies, or even job loss.

How to Start from Scratch

If you don’t have an emergency fund, the best approach is to start small. Instead of aiming for six months of savings right away, set an initial goal of one month’s worth of essential expenses.

First, calculate your fixed costs: rent or mortgage, food, transportation, utilities, daycare, and other necessities. Then, open a separate savings account for your emergency fund and set up automatic transfers—treating savings like another bill you must pay. Even if you can only save enough to reach your goal in a year, that’s still progress.

Balancing Savings and Debt

If you have high-interest debt, balancing repayment with savings is key. Anthony Martin, CEO of Choice Mutual, writing for Kiplinger, recommends building an emergency fund while also working to pay down expensive debt, such as credit cards.

Some advisors suggest a different strategy. Financial expert Dave Ramsey advises first saving $1,000 in emergency funds before aggressively tackling debt. Once debts are reduced, more income can be directed toward savings.

Reaching the Ultimate Goal

Once you’ve saved enough to cover one month of expenses, work toward three months. Then, aim for the six-month safety net. Cutting nonessential expenses, like dining out, can help speed up the process.

An emergency fund provides security and peace of mind. Even a small financial cushion can prevent unexpected expenses from turning into long-term debt. The key is consistency—starting small, staying committed, and watching your savings grow.