Your Financial Shield

The Non-Negotiable Emergency Fund

Author

Chandler Swaney
August 06, 2025 • Estimated Reading Time: 4 minutes

Now that you've got a budget in place, it's time to talk about your financial shield: the emergency fund. This is your non-negotiable safety net, designed to protect your budget and your peace of mind from life's unexpected curveballs, like a car repair or a surprise medical bill. This week, let's learn how to build one, step by step.

Your Budgeting Action: Start Your Emergency Fund Today

An emergency fund is money set aside for, well, emergencies. It keeps you from going into debt when the unexpected happens.

  1. Set Your Goal: How much do you need? A good starter goal is $1,000. This can cover most small-to-medium emergencies. The ultimate goal is 3-6 months of your essential expenses.

  2. Make It a "Bill": In your budget, make "Emergency Fund" a non-negotiable line item, just like rent or groceries. Make a plan to contribute to it every payday.

  3. Automate It: The easiest way to build it is to automate it. Set up an automatic transfer from your checking account to a separate savings account every time you get paid. You won't even miss the money!

  4. Put It Somewhere Safe: Keep this money in a separate, high-yield savings account where it's easy to access but not so easy that you spend it accidentally. It's not for a vacation; it's for true emergencies only.

Why this matters: An emergency fund is the shield that protects all your other financial goals. It allows you to stay on track and in control, no matter what happens.

Remember you don’t have to do it this way. I don’t automate my savings because I personally like to be more conscientious of where I put my money. I do automate my big bills like my mortgage and utilities.

The emergency fund is essential to your budget. Issues like car trouble, medical emergencies, and other unforeseen expenses can happen at any time! This money needs to be accessible, so consider putting it into a high yield savings account so it at least earns interest. It’s better to have an emergency fund and not need it than to not have one and need it. Think of it as insurance, because it is!

Your Investing Insight: Financial Fortress!

Without the emergency fund, a sudden expense could force you to sell your investments at a bad time, turning a short-term problem into a long-term financial setback. Your emergency fund protects your investments, so they have the time they need to grow without being disturbed.

📈 Your Next Steps:

This week, your mission is to start. Pick a goal of $500 or $1,000, and set up an automatic transfer. Even $25 from your next paycheck is a huge first step!

Since everyone’s finances are different and personal, try building up your emergency fund over time to cover 3-6 months of necessary expenses like shelter and food. You got this!

Keep growing your cents!

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Disclaimer: This newsletter offers general financial education, not personal advice. For your specific situation, please consult a qualified financial professional.