Build Your Emergency Fund

From zero to a 3-6 month cushion, in the order that actually works without burning out.

Calculate the Target

• Add up monthly essentials: housing, utilities, food, transport, insurance, minimum debt payments
• Multiply by 3 (single income, stable job) or 6 (variable income, dependents)
• Write the dollar number down — not aspirational, real

Step 1: Starter Fund ($1,000)

• Open a separate high-yield savings account (HYSA) at a different bank than checking
• Look at Marcus, Ally, Capital One 360, SoFi, Discover — 4-5% APY common
• Set up automatic weekly transfer of any amount, even $25
• Hit $1,000 first — covers most surprise expenses

Step 2: Pay Off High-Interest Debt

• List every debt with balance, minimum payment, and APR
• Above ~7% APR (credit cards): attack with everything beyond minimums
• Below 5% (mortgages, federal student loans): pay minimums while building fund
• Avalanche (highest APR first) saves most money; snowball (smallest first) builds momentum

Step 3: Full Emergency Fund

• Resume aggressive savings until you hit your full 3-6 month number
• Automate transfers on payday — pay yourself first, before bills
• Increase the transfer amount every raise or windfall
• Keep it visible: track progress on a chart or app

Where to Keep It

• Dedicated HYSA — not investments (too volatile) and not checking (too tempting)
• Accessible in 1-2 business days; FDIC insured
• Not at the same bank as your checking — friction is a feature

Rules of Use

• Use only for: job loss, major medical, urgent home/car repair, family emergency
• NOT for: vacations, holidays, planned car replacement — those need their own savings
• Replenish the fund as priority #1 if you have to use it

Annual Tune-Up

• Recalculate target every year as expenses change
• Move bank if APY drops far below market