Creating an Emergency Fund

What could possibly be more exciting than creating an emergency fund? Well, training to run to work when your car breaks down would be more exciting, as would taking on a temp job as a dog walker if your company decides to downsize. When you’re ready for your life to be more stable and a bit less exciting when it comes to balance-shattering catastrophes, it might be time to bite the bullet and start that emergency fund after all.


Like your first day training for a marathon, the toughest part of creating an emergency fund is getting started. To continue the analogy, it’s also best to start small. If you set your goals too high, you may burn out. The trick is to put away just enough that you don’t miss it. Use your online banking tools to figure out exactly on what you spend your disposable income. Take a little bit of that and put it in a “black hole” fund from which you never withdraw money or even think about very much. Transfer a small amount to this fund every month automatically, and then forget it exists until you need it.

One way of thinking about your emergency fund is to consider how much money it takes you to live every month. How much would you need in your emergency fund to cover all your expenses for an entire month? Figure out that number and break it into bite-sized pieces that you can handle each month. If your total monthly expenses are $1,200, and you’re able to put up $100 per month, it will take you exactly one year to get one month ahead of your financial obligations, and so on.

Discipline is the key, but a little positive reinforcement doesn’t hurt. Reward yourself for hitting your savings milestones (just don’t use any of the money from your emergency fund). And don’t fool yourself. If you really just want a vacation, call it a “vacation fund.” If you go through the trouble of setting up an emergency fund, treat it as such, and make a vow never to break the glass until the fire is raging. Taking yourself out of the equation as much as possible will only help your fledgling emergency fund take root.

Other than a responsible disposition, the only parts of the process that might require some help are pulling together the numbers and setting your initial goals. United Bank is happy to help you along the path of adulthood all the way to the land of savings. We’ll help you set reasonable goals and say things to make you feel pleased about being so responsible. Get some peace of mind and get ready for a chain reaction of little accomplishments. Start your emergency plan today with United Bank.