Mark it once you can do it without this page open.

How to do it

  1. Set the first goal: an amount about equal to one month's rent.
  2. Open a savings account at an insured bank or credit union, separate from your everyday account, with no debit card attached.
  3. Schedule an automatic payday transfer, however small, so the saving happens before the spending.
  4. Put unexpected money there first: a tax refund, a bonus, cash from selling something.
  5. Once the starter goal is met, raise the target to three months of rent, utilities, food, insurance and minimum payments.
  6. Decide now what counts: a car repair to get to work does, concert tickets do not.
  7. After you use it, pause other savings goals until it is refilled.

Stop and call a professional if

  • You want advice on your own numbers: a fee-only financial planner or a nonprofit credit counselor can give it; this page only explains the terms.

Common mistakes

  • Keeping it in your checking account, where it slowly gets spent.
  • Waiting until you can save a big amount each month before starting.
  • Using a credit card as the emergency plan.
  • Dipping into it for planned costs such as holidays.

Quick self-check

Three questions. Your last score is kept in this browser.

1. Your car needs a repair to get you to work. Is it an emergency fund cost?
2. Why keep the fund where no debit card can reach it?
3. What comes first after you use the fund?

Teach this to someone

A one-page sheet for showing a friend, a roommate or a kid: what to say, what to show, and one question to check it landed.

Words on this page

Last reviewed . First published .