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Point Breeze Credit Union Blog

Resolution for the New Year: Build an Emergency Fund

Setting up a dedicated savings or emergency fund for times like this is essential to protect you.

We’ve all experienced unexpected financial expenses – a fender bender, unplanned medical bills, loss of income, emergency vet bills, or even a broken phone. Whether the amount is small or large, it always seems as though these expenses occur at the worst times.

Setting up a dedicated savings or emergency fund for times like this is essential to protect you. Putting aside money for unplanned expenses, even a small amount, can help you recover faster and get back on track towards your larger savings goals. What better time to start than the beginning of a new year?

What is an emergency fund?

An emergency fund is money specifically set aside for unplanned expenses or financial emergencies. Some examples of these would be unplanned car repairs, home repairs, financial expenses, sudden loss of income, etc.

Generally, emergency funds are used for large or small unplanned bills or payments that aren’t a part of your routine monthly expenses or spending.

Do I really need an emergency fund?

According to the Report on the Economic Well-Being of U.S. Households in 2022 – May 2023 from the Federal Reserve, 37% of adults said that to cover a hypothetical expense of $400, they would have to borrow money, sell something, or they said they would not be able to cover the expense at all.

Without savings, emergency expenses—even if they’re small—could be a setback. They could also turn into debt, which can have a lasting impact.

Research shows that individuals who struggle to recover from financial shock have less savings to help protect against a future emergency. A lot of times they rely on credit cards or loans, which can lead to debt that’s harder to pay off. They could even have to pull from other savings, like retirement funds, just to cover the expenses.

How much do I need in an emergency fund?

The amount of money you need to have in an emergency fund depends on your situation. Think about the most common kinds of unexpected expenses you’ve had in the past and how much they cost. Estimating potential costs could help you set a goal for your emergency fund.

Let’s do some math here. Taking $5 each bi-weekly pay period and putting it into an emergency fund would give you $130 after a year. $10 each pay period would give you $260. There are more examples in the table below, but you get the point. The cost of one of your morning coffees every other week can help you take off some of the burden of unexpected expenses.

Amount Saved


















If you don’t get paid the same amount each week or month, or live paycheck to paycheck and can’t afford to put more than a few dollars in the account each pay period—that’s OK! Setting aside even a small amount regularly can help protect against unplanned setbacks.

How should I build my emergency fund?

Create a savings habit. Set a goal—a specific goal—for your savings.

Make a system for consistent contributions. This could be in the form of automatic recurring transfers or setting aside a specific amount of cash a day, week, or payday period.

Monitor your progress. Check your savings regularly to make sure you’re staying on track.

Celebrate your successes! If you are staying consistent with your savings, or maybe have already reached your goal—celebrate that! Don’t miss out on the opportunity to recognize what you’ve accomplished.

For more financial tips, visit our blog page.



Report on the Economic Well-Being of U.S. Households in 2022 - May 2023