Do You Really Need an Emergency Fund? + How to Make One

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Last updated on November 29th, 2025 at 07:46 pm

When you’re raising a family, it feels like there’s always something popping up—a surprise medical bill, a flat tire, an appliance that quits at the worst possible moment. That’s why an emergency fund isn’t just a nice idea; it’s a layer of protection that keeps everyday chaos from turning into full-blown financial stress. But how big does your emergency fund really need to be? And how do you build one when you’re already stretching every dollar? In this post, we’ll break down what an emergency fund actually is, why it matters for real families, and simple, doable ways to start one today.

Is an Emergency Fund Necessary?

Generally speaking, yes, an emergency fund is necessary. What form it takes can vary, but it is a
good idea to have an emergency fund. Such a fund can help you avoid high-interest debt and it
helps reduce stress. After all, life is full of changes – many of them sudden and not challenging- and
having that “cushion” can help you feel ready and less stressed.

How Do You Go about Creating an Emergency Fund?

First, determine your expenses. Look at three to six months’ worth of living costs and count on
saving that much in a fund. This can help you keep your standard of living for a time if you lose
your job or it can cover a large expense such as vehicle repair.

Then, determine how long it will take you to save that much and how much you have to take out of
your paycheck each month to reach that goal.

Finally, once you’ve determined how much you need to save and how long it will take to save it, it’s a good
idea to change your mentality to put payments into the emergency fund before you pay for anything
else. If you can do it by automatic deduction, go for it – see if you can have a portion of your
paycheck taken out and put into a savings account. Otherwise, make it a habit to put money in your
savings first and foremost, and then take care of your other expenses after.

What If You Have Low Income?

Even if you have low income, you can set aside something each month. Try saving a percentage of
your income, such as 5 or 10 percent. It may take you longer, but it will accumulate. When we were living paycheck to paycheck, our first goal was $1000. Then, $6000, and so on. Not having one at all will just continue the cycle of debt, paycheck to paycheck, and never coming out of the hole.

Does It Have to Be Huge?

In short, no. An emergency fund does not have to be massive – but it certainly should cover
unexpected expenses. Take into consideration what things would likely need to be replaced. If you drive an older car, think of car repair when determining your emergency fund. Insurance can help with unexpected catastrophes as well. If you rent a home, you should definitely have renter’s insurance It’s super inexpensive and worth every penny!