Everyone should work to build an emergency fund. It doesn’t mean that you’re irresponsible with money or expect your budget to fail. It’s a useful tool to help you navigate the windy roads of life, protecting both your wallet and your peace of mind. If you don’t have an emergency fund, or if you’d like to grow your fund this year, here’s how to get started.

Where to store your emergency fund

First, you might be wondering where to keep your emergency fund. How should you keep track of the money without accidentally spending it or losing the account? At Affinity, we recommend making a savings account that you can review in online banking alongside your checking account.

Our SmartStart Savings accounts¹ are a great option, offering 2.75% annual returns on the first $10,000. In addition, SmartStart accounts have no monthly fees and no minimum starting amount, so you can grow your savings at your own pace.

Setting your goal

To set and keep your goal, you’ll want to clearly outline the intentions behind it. Remember that an emergency fund is designed to support you in case you lose a job, get sick, or face unexpected bills. Some advice pushes you to save 3-6 months of expenses, but that can feel overwhelming. Try saving small amounts on a regular basis, and watch how it starts to add up.

A helpful strategy to make saving easier is to automate the process. Setting up a small partial direct deposit into your savings account or scheduling an automatic transfer from checking to savings on your paydays can make contributions feel effortless. Because the money moves automatically, it becomes “out of sight, out of mind.” Over time, most people naturally adjust their spending to match their available paycheck, rather than feeling the impact of the savings deduction.

You can also set your savings goal based on real expenses. Review your bill from the last time you had to fix your car or take your dog to the emergency vet. You can’t predict disasters, but you can use your past experience to plan for likely outcomes.

Make sure to be specific about your savings goal, including the amount of money you will add on a weekly or monthly basis and the total amount you want to reach. Find small ways to reward yourself as you watch the numbers grow, and celebrate when you reach your total goal.

Managing an emergency fund long-term

An emergency fund helps with more than the day-to-day expenses. It’s a good way to support your financial goals and avoid debt. Instead of relying on credit during times of stress, you can fall back on what you have saved. It’s not only helpful to get through a short-term emergency, but also to keep your long-term goals on track. Like all financial accounts, it’s important to keep track of your fund and adjust how you use it over time.

Occasional withdrawals from an emergency fund are normal - you made the account to support yourself, and you should use it accordingly! Make sure you only spend the money in an irregular, costly situation, so you don’t deplete your savings too quickly. When your fund is getting low, revisit your savings goals and take steps to restore it. Over time, you’ll see how you use the fund in practice and can get more specific about your plans.

If you need assistance with your financial goals or feel unsure of where to start, you can reach out to one of Affinity’s Certified Wellbeing Coaches² for free. Taking a small step today will make a huge difference in your financial life tomorrow.

This information is for informational purposes only, is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person's circumstances differ and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and legal counsel to discuss your particular needs before making any financial or other commitments regarding the matters related to your condition.

¹Retrieved from: https://www.affinityfcu.com/personal-banking/banking/savings/smartstart-savings

²Retrieved from: https://www.affinityfcu.com/financial-wellbeing/certified-wellbeing-coaches