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Emergency fund in a jar

When it comes to money, a lot of us have budgets in place and compulsively check our bank accounts to make sure we have what we need to cover our monthly expenses.

But what if the unexpected happened?

According to a 2017 article from, more than 57 million Americans have zero dollars saved for emergencies. That means if any of them suffered a sudden financial emergency, they'd immediately enter panic mode.

In order to avoid that in your own life, you seriously need to work on an emergency fund of at least $500 (more than $1000 would be spectacular). Here's why and how you can achieve this level of confidence in your finances!

Working on Confidence

Most people with comfortable jobs (even those paying more than $100,000) simply aren't prepared to pay for something unexpected. They can afford all their regular bills, their day-to-day expenses -- but that leads to a level of false confidence that can be dangerous when disaster strikes.

A sudden life event such as the loss of a job, a medical emergency, or a car accident could drive even high earners into immediate debt.

So if you don't know how you could handle such an issue, you shouldn't allow yourself to sink into complacency. Instead, be vigilant, and start working on building your emergency fund.

Saving Is Key

If your income provides you with enough flexibility to allocate money where it's needed, there's a solid chance you can figure out how to put money into savings after each paycheck.

For most Americans, 50-60 percent of their earnings go directly into the major bills -- rent, car payments, etc. The rest is divided between food, insurance, gas, and extras. Even if at the end of the month, you only have about 5-10 percent of your total monthly earnings left over, that is a healthy amount to pour into a savings account.

Over a few months, that money will undoubtedly grow. And if you're able to pay off debts through your budget using the popular snowball method we've discussed in the past, you'll be able to allocate more money to your savings over time.

How Much Money Should Be in an Emergency Fund? 

An emergency fund should have at least several thousand dollars in it. You want to save enough money to cover unexpected events that will cost more than, say, a trip to the grocery store. It will take time and effort to save up this money, and you want enough that you can survive comfortably for a few months without any income. 

You can calculate the right amount for your emergency fund by budgeting. Determine your monthly budget, which covers all your regular expenses, such as: 

  • Rent or mortgage
  • Utilities like electricity, gas or water
  • Sewer and garbage expenses
  • Groceries
  • Debt payments such as car loans or student loans

Adding up how much money you need each month to cover these expenses can give you a number to shoot for initially. Try to aim for four to six months' worth of living expenses in your emergency fund. The money can help you stay afloat in case of an emergency, such as if you lose your job or become injured and unable to work. 

Once you have saved enough for your living expenses, you may want to focus your attention on saving money for other causes as well, such as investments. While having a money cushion is always desirable, you also want to look out for your long-term interests by using your money to make money. Six months of living expenses can carry you through almost any emergency. 

Where to Keep Your Emergency Fund

Emergency fund money should be easily accessible. You need to be able to get to your money to pay bills or cover significant, unexpected expenses, so keep it in a place where you can get to it quickly. 

A savings account dedicated to your emergency funds is the best way to save. You separate the money from your checking account, so you aren't tempted to use it to pay for everyday expenses or even something extra, like a new video game console. Your money will grow in a higher-interest-rate savings account, though it won't reap the benefits it would if you invested in the stock market or a CD. However, money is hard to access in those places, and you need liquid funds. 

What Should You Use Your Emergency Savings Funds For? 

Everyone has different expenses, and everyone has different emergencies. For example, you may be able to cover a small car repair with the money in your checking account, or you may not have enough to make the payment. It's up to your discretion when to tap into your savings account to access your emergency money. Life circumstances will dictate when you need the money. Here are a few cases when you could use the emergency fund: 

  1. You or your spouse are laid off: Losing your job presents a bunch of problems. Covering your monthly living expenses will be one of your top concerns. You may worry about making your mortgage payment or having your electricity turned off. An emergency fund can help you through a rough patch and keep you from charging too much on your credit card, leading to longer-term debt. 
  2. You need immediate house repairs: A busted pipe or mold buildup demand your immediate attention. You need to get big problems like these fixed right away, so they don't turn into something even worse. You can use your emergency fund to pay for big and small home repairs. 
  3. Your car doesn't pass inspection: You have two choices when this happens, and both of them involve spending a large amount of money. The first option is to get the car fixed, no matter what the cost. The second option is to trade in the car and buy a new one. You will likely need money for a down payment, and you can take from your emergency fund. 
  4. You have a serious medical matter: Health issues can arise at any time. Even someone without a family history of health issues can develop a serious illness or disease. Having the money to pay your bills can help make treatment less stressful.

How to Get Immediate Help

If you've just started working on savings for your emergency fund and the worst occurs, you have options. First, determine exactly how much of your current savings or extra money you can use to throw at the problem.

Afterward, you can look toward financial help in other areas. For instance, a personal loan of up to $1,400 from a lender like Atlas Credit in Texas or Oklahoma can help! By applying for a personal loan online or in person, you can get a quick and easy supplement to your monthly income that will allow you to make it through even the most trying of times.

Apply For a Personal Loan Online

Do you have an emergency fund in place? When you follow our step-by-step guide to getting emergency money now, you will feel more secure and confident about your ability to deal with unexpected life events. 

For more information on how to survive financial emergencies and prepare for the future, read more in the Atlas Credit blog posted each week!

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