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Friday Finance: Emergency Funds – how much is enough?

If there’s one financial safety net every adult needs, it’s an emergency fund. Why? Because life has a way of surprising us — layoffs, medical bills, car repairs, or a sudden move can knock us financially off course. Without a cushion, those surprises often turn into punishing debt. An emergency fund is your financial buffer; it’s a way to stay afloat when the unexpected happens.

So how much savings is enough for an emergency fund? A common rule of thumb is to build a fund large enough to cover at least three months of your expenses. That amount is designed to give you breathing room — time to pay essential bills, keep a roof over your head, and avoid panic decisions when life throws you a curveball.

But experience has taught us that three months might not always be enough. During the COVID-19 pandemic, for example, many financial planners doubled that recommendation to six months of expenses. Why? Because people learned the hard way that finding a new job or regaining financial stability can take longer than expected. A six-month cushion can mean the difference between weathering a storm and spiraling into debt.

If that number sounds intimidating, don’t let it stop you from starting. Most people don’t save their emergency fund all at once — they build it gradually over several years. Even setting aside a small amount from each paycheck — $25, $50, or $100 — will grow over time. The key is consistency. Think of it like training for a marathon: the first few miles feel tough, but once you build momentum, every step brings you closer to the finish line.

Here’s a simple plan:

  1. Start small and automate. Set up an automatic transfer into a dedicated savings account after every paycheck.
  2. Build your first milestone. Aim for one month’s worth of expenses first.
  3. Keep building the fund over time. Once you hit one month, stretch to two and three. When life allows, aim for six.

The peace of mind that comes with a fully funded emergency account is hard to overstate. It turns unexpected crises into manageable inconveniences — and that’s one of the most powerful forms of financial freedom you can give yourself.