How to Build an Emergency Fund

profile Current Team  |  March 18, 2022

This post is for informational purposes only, and Current does not endorse any personal finance decisions or products you may make or open. Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.

You can start building your emergency fund with small, regular deposits that gradually increase in amount. The goal is to get to a running fund of three to six months’ worth of expenses to cover any unexpected emergencies.

Building an Emergency Fund

It can be intimidating to think of building an emergency fund. Some people already struggle to make ends meet and might not have extra funds to spare. Others might be experiencing financial security for the first time, and don’t want to think about planning for an emergency when things are finally stable and consistent.

However, regardless of which category you fall in, it is important to build an emergency fund because you need to be prepared for unexpected expenses. Having accessible money on hand is a vital part of your financial well-being. With proper planning, you can grow a small emergency fund into a reservoir of rainy day money, which will help you cover unexpected car service repairs, vet bills, or last-minute plane tickets for a family emergency, without wiping out your checking account.

With Current, our Savings Pods make it easy to begin to build your emergency fund.

How to Build an Emergency Fund

So, how can you build an emergency fund? The trick is to make deposits consistent and regular. You can start small. Instead of thinking of putting away three months’ worth of your expenses into your emergency fund, try just doing one week of expenses. If that’s too difficult, try half a week. The point is to make your goal manageable.

Checking that first goal off your list — no matter how small the goal is — will give you the motivation to keep going. Saving a weeks’ worth of expenses will eventually become a month’s worth, which will build to three months’ worth of expenses over time. With some discipline and commitment, you can grow your way to a healthy and robust emergency fund that can cover the damage of most forms of worst-case scenarios.

Another advantage of this method is that it makes saving money and contributing to your emergency fund a habit. You will automatically start to put money away for a rainy day, and this kind of diligence will help you be smarter in other financial matters too. When done properly, your emergency fund will be able to build itself. It just needs some care and attention getting off the ground.

Building Small

To that point, your basic contributions to the emergency fund should be a small amount, even as little as $5. The goal is to start, no matter what that amount is. It is also important that whatever you contribute to the fund should not hurt your cash flow or alter your way of life because then it becomes easy to abandon building the fund.

This might entail creating a budget to look at any expenses you can afford to cut out. Whatever money you save by trimming your unnecessary budget items becomes your founding contributions to your emergency fund.

Regular Deposits

When you’ve determined what that amount is, make it a point to commit to those savings at regular intervals, either every week or every month, or every time you get a paycheck. Saving money and growing your emergency fund need to become a habit, not a chore or an occasional action.

An easy way to do this is to set up a separate account for your emergency money, like Current’s Savings Pods. It is easier than ever to save money with your Savings Pods when you enable round-ups, which automatically allocates funds from purchases, which will be rounded up to the nearest dollar and set aside into your account every time you swipe. You can also save money using scheduled deposits that automatically transfer money into your Savings Pod to help you reach your savings goals. Putting away the money without having to think about it is the easiest way to save.

You can even earn a bonus on the money in your Savings Pods by enabling Current Boost, allowing this money to grow even more over time and maximize every dollar. Monitor the money in the pod regularly, and you’ll be pleasantly surprised to see its strong and steady growth over months and years.

Save Carefully

To properly build an emergency fund, it’s important not to let your guard down. A lot of people fall into the trap of getting overconfident with the health of their emergency fund, sometimes taking money from it and using it for frivolous expenses. An emergency fund is an investment in yourself and your future. It shouldn’t be used for everyday expenses.

The other side of the coin is to avoid pouring so much money into your emergency fund, that you struggle with your regular expenses. You need money for groceries and other necessities, and you need money to enjoy life. As important as it is to build your emergency account over time, it is not the end-all be-all of your financial well-being.

High-Yield Accounts

So, how much should you save in your emergency fund? Financial experts recommend that your emergency fund should have enough money in it to cover up to six months’ worth of expenses. This can seem unreachable for many people, and some financial experts recommend that an emergency fund that can cover three months’ worth of expenses is sufficient.

Again, it does not matter how small your start is. Some people can put $100 in, and some people begin with $5. But as long as you make that start and keep going, you will be on your way to building a useful (and important) emergency fund.

It is good to have a specific savings goal. This gives you something to work toward. But this goal will be different for everyone. Your income, expenses, and living arrangement will be unique to you, so there is no one who can pinpoint an exact amount as your goal.

Creating a budget and monitoring your income and your expenses will give you a realistic sense of what your emergency fund should look like in six months’ time and then a year. As your life changes, so should your savings goals. Consider gradually increasing the amount you put into your emergency fund, so that even when big problems happen, addressing them won’t wipe out your checking account.

Where should you keep your emergency fund? The best place to keep your rainy day money is in an account that earns interest, like Current’s Savings Pods. These options offer quick access to the money, while being off limits for daily use. They will offer a competitive yield for the more money you keep in them for long periods of time.

Talk to a financial institution or advisor, or read up online, to choose the best kind of account for your emergency fund. If you can, set up automated, regular payments from your checking account into this savings account, so that your emergency fund will grow on its own.


Emergency Funds Can Offset Surprise Medical Bills, Unemployment And More—Here’s How to Get Started. (January 2021). CNBC.

37% of Americans Worry Their Emergency Funds Aren't Big Enough: How to Build Yours Fast. (October 2021). USA Today.

4 Steps to Cultivate the Habit of Saving Money. (March 2018). Psychology Today.

Here’s How to Save Money When You Don’t Want To Make Any Sacrifices. (November 2021). CNBC.

How to Automate Your Savings. (April 2020). Forbes.

Ways to Manage Your Money Better. (August 2021). Current.

Economists Say This Is the Minimum Amount of Money You Need in an Emergency Fund. (October 2019). CNBC.

Best Places to Keep Your Emergency Fund. (December 2020). Forbes.

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