<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1374196319426675&amp;ev=PageView&amp;noscript=1">
Return to Blog
Return to Home

Financial Blog


4 Steps for Building an Emergency Fund

by Third Coast Bank SSB

Ample research has been done to study the savings habits of those who reside in the United States. Numbers vary depending on the source but all are alarming. For example, a Federal Reserve survey found that 40 percent of Americans don't have enough in savings to cover a $400 emergency. Additionally, 27 percent of respondents would need to borrow money or sell personal items to come up with $400 and 12 percent wouldn't be able to deal with the emergency at all.

When unexpected expenses occur, $50 might as well be $10,000 when you don't have the money to pay for the emergency. Similarly, health issues and unexpected job loss can make it impossible to weather difficult times without savings. The vast majority of financial experts recommend you have at least three to six months of expenses in an emergency fund. This might sound like a lot and feel overwhelming, but with some pre-planning, the proper personal banking solutions, and some action, you can achieve your savings goals. Below we provide four steps for building your emergency fund.


1. Make a Budget.

woman budget cafeThe first step to building your fund is understanding exactly how you are spending your money and what you are spending it on. You can do this by making a budget. If you are on the go, you can use the notepad in your phone or find an app to help you out. Regardless of the way you choose, you must write down where every penny of your income goes throughout the month. This will help you figure out your monthly expenses. Remember, your emergency fund should be at least three months of expenses including things like your rent or mortgage payments, utilities, student loans, and any other recurring monthly payments.


2. Identify Areas for Saving. 

Once you know where your money is going, you need to identify places you can trim your budget. It's in your best interest to try to stash away $1,000 as soon as possible. This amount can help you in a pinch if you have vehicle troubles, a pet gets sick, or you have some other emergency. When you write down what you spend, you can see the extra money you spend at Starbucks, the amount of online shopping you have done, and what you might have spent on a night out with friends or date night. It's these areas which are easy to cut back and increase the amount you contribute to your emergency fund. If you have credit card debt, you might consider paying off the lowest balance card, cutting it up, and using the payment amount to begin saving.


3. Open a Separate Savings Account.

Emergency funds are for just that--emergencies only. This means you need to keep your fund separate from any other checking or savings accounts you have. Instead, open up a special account for your emergency fund and don't take money out unless you absolutely have to. When you have online access, you can watch your fund grow at the same time your anxiety melts away.


4. Contribute to Your Account Until You Reach Your Savings Goal. 

little girl putting money in piggy bank

Once you know where your money is going and how much you can contribute, keep contributing to your fund each month until you have six months of expenses. Online access will make it easier to automate transfers into your emergency fund account, saving you the time and trouble from manual transfers. Once you reach six months of expenses, you might choose to increase your fund or think of other ways to save or invest the money you were contributing.


Take advantage of the personal connection offered by Third Coast Bank. We offer a variety of checking and savings accounts which can hold your emergency fund so you are prepared for a rainy day. You will also enjoy online access, remote deposits, and e-statements. You can open your personal account today from your mobile device or your computer. 

Find the right savings account for me!



Blogging Savings Personal Savings

Third Coast Bank SSB

Third Coast Bank SSB

We write banking articles on how to build savings, balance your budget, and much more.