How to Start an Emergency Fund

by Mackenzie Stewart

The hardest part about saving money is saving money. Real talk. When you have a salary that barely covers your monthly expenses, the idea of putting something aside for later is either bananas or just not possible. My guys, we need to make it possible. Those of us with small incomes knew well before this pandemy what an emergency could do to our finances. We are not going to keep on with this kind of living because we deserve financial stability, and having an Emergency Fund is a big step in how we secure that.

But how do we save money for an emergency when we got like, no money? We have some tricks for that.

What is an Emergency Fund?

It’s a savings fund for if you suddenly find yourself out of work, need an unexpected car repair, or need to take a kid to urgent care for a bug bite. It’s money saved that covers the unexpected so you aren’t relying on money from your checks that need to go to expenses and you’re not using credit cards. 

How much to save in your emergency fund?

The amount that should be in an Emergency Fund (which I will call an EF through the rest of this because brevity). should be enough to cover 3-6 months’ expenses or up to one year. I know. That’s A LOT! You’re not going to start there though. You are going to start at a much smaller amount. 

Practice, practice, practice.

Saving more requires practice.

Saving is a muscle that has to be worked over and over again to get good at it. I use a weight lifting analogy because it correlates well. You don’t run into the gym and lift the heaviest weight immediately. You start with the smallest weight and get used to that. Otherwise, you’re going blow your back out (not in the good way either!) and never go back to the gym. As you get proficient, you increase the weight until you safely lift that 200 lbs. That is how saving works. 

If you don’t make much money, your starting goal is $100. Yup. Just $100. That is the first milestone. There are so many ways you can save $100. You can save $25 a month over four months. It can be $50 per paycheck. It can even be $10 a month for ten months. What we want to do at this level is just get used to saving. Get comfortable putting money someplace you won’t touch it. 

This is especially helpful for you all with fluctuating income. Rather than focus on putting away X% of each paycheck or whatever is left over after bills, mark a definitive amount and think of that amount as a bill that has to be paid every payday. If you need extra help with figuring a budget without having a set work schedule, check out this piece I wrote for Nav.It about that very thing! Speaking of, where do you keep an EF?

Where you save an emergency fund?

In short, where it makes the most sense for you. You’ll see people advise a High-Yield Savings account, which is an account that lets you accrue interest on the money you keep in it and also puts withdrawal limits and penalties so you’re not tempted to take money out all the time. The more money in it, the more interest you make, which goes right back into that account. Ally is the most common, takes minutes to open, and it’s all online so you can’t go to an ATM and pull the money out. 

If that seems like a lot of work, try using the automated savings feature in Nav.it, the money tracking app. You’re already on Nav.It’s website! Use their app! Because it syncs with your bank accounts, you can automate your savings in a separate FDIC insured bank account. 

Keep your savings safe

If banking online or through an app isn’t accessible for you, keep the money in a safe place. I kept my first EF in a little brown envelope in my sock drawer. Look at banking options, preferably a high-yield savings account, but if you can’t right now, the sock drawer is fine. 

Enjoy the milestones

Gradually building your savings means keeping track of your progress. Let’s say you picked putting away $25 a week and we’re now at the end of month one and you have your first $100. AMAZING! Bask in the glory of your success! Take a minute and think about the next amount you want to aim for. It can be $200, it could be $500. Shoot for increments of at least $100. That amount is small enough that you can fit it into a budget but big enough that it takes some work. Keep with these increments until you hit the most exciting milestone, at least in my opinion, which is $1,000. 

Why do I think this is the most exciting? Because at the federal minimum wage, you don’t even clear this on your checks. Some of you might not even clear this in a whole month. It’s a number people at lower incomes don’t see in our finances a lot, so to have $1,000 saved means you now have more than what you make in one month. That is not small potatoes.

Making more money to save more

If your current income has no wiggle room, you need to find it. Harsh I know, but you can make $1 last five days if we need to. We have the skills to find the funds. 

You can pick up one extra shift at work a week and designate that to your EF money. There’s always someone willing to trade a shift and have a night off. 

Hello, side-hustle.

Sell some things on Facebook Marketplace. It’s an easy way to not only get rid of clutter but to pick up a few dollars here and there to stash away.

If you make tips, set aside one particular denomination. I always picked $5 bills and any time I got one at work, it went in my brown envelope in my sock drawer. 

What happens after you save $1,000? 

Sky’s the limit, birdies

After my first $1,000 was saved, I set a big honkin’ goal of one year of take-home pay, or $23,000. (That’s right. I live life at 23k a year.) This was the umbrella goal and underneath were smaller milestones so I wasn’t trucking for the big one right away. Remember earlier I explained saving is a muscle. We want that forward momentum and seeing each $100 or $1,000 goal be met keeps us motivated to continue. 

Set goals and track your financial progress

Once you’re at that $1,000, try for $2,000. Be a little goofy and aim for $5,000. Was $1,000 harder than you thought? No bigs. Make the next goal $1,500. Find a number that feels attainable but also challenging and go for it. Need a little bit more guidance on setting attainable goals? Check out this article.

Remember not to touch your emergency fund, unless it’s an emergency

It needs to be said: this money is meant to be left alone and used for sudden expenses and emergencies. We all have a different take on what an emergency is. If your computer craps out and you need one for school, that’s an emergency. No computer means it’s going to hinder you from completing something necessary. The same is true for a car repair – getting from point A to point B is essential. Getting new rims for your car? Not so essential. Also, if you see there’s a music festival coming to your city and you want to get $500 three-day passes, you better pretend that EF doesn’t exist. Find the money elsewhere. 

I’m going to go into auntie mode and tell you some things you might not like, but you need to hear it anyway. It’s one thing to have trouble saving because of low wages and life necessities you have no control over. It’s a whole other thing to not have savings because you have spending habits that don’t match up with your income. We’ve all done it. You are not going to accomplish goals by doing the same thing you’ve always done. The same is true for weightlifting. You won’t make gains by doing things the way you’ve always done them.

You need to move differently. This may mean going without something you want. It will be tempting to dip into that fund for a little thing here or there. Trust me, it’s not worth it. If you know that a music festival is coming and you want tickets, you save for it in a different spot and leave the EF alone. If you can’t save enough in time, tough cookies. Saving money at a low income is not easy. Don’t put in that hard work to spend it on something that takes away from your financial security. 

Having an emergency fund is essential to your financial well-being

Having a financial safety net is paramount to getting ahead with your money. It’s also one of the hardest steps to accomplish if you make minimum wage. Saving money is going to take work. Don’t sweat it. We’ve already done the work to survive. We can do the work to make sure we thrive.

Set those micro goals and work up to your big pie in the sky number. If goal setting isn’t something you’re familiar with, check out this post that breaks it down in manageable steps. Get familiar with the routine of putting that money away, whether it be in a shoebox or auto-deposited from your paycheck. Exercise some restraint to avoid dipping into it for things that aren’t emergencies. 

You got the skills. I know you do. Put them to work and look out for your Future Self by building your emergency fund.

Related Reads

Basics of a High Yield Savings Account

How to Save More Money

How Tracking Your Money Can Help You Save More of It

Setting Attainable Financial Goals


Mackenzie Stewart launched her site Life at 23k to fill a void for the people who can’t afford to invest or start an emergency fund. She wants to find and give financial advice that the underemployed minimum wage worker can use – not just those making great salaries with marketable degrees already.

You can find her on Instagram, Twitter and Facebook.

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