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Saving for Emergencies

Money hidden in books

One of the most effective tools for preventing a large-scale financial disaster is an emergency fund. An emergency fund is an amount of money that is set aside to cover unexpected expenses, or to keep you afloat if no regular income is coming in.

Even if you have a great handle on your finances, unexpected challenges can come along that threaten your financial stability like losing a job, dealing with an injury, overcoming an illness, or having to help a family member who is in need. If you’re not collecting a paycheck, or if you have large, out-of-the-ordinary costs to cover, that can throw your monthly budget completely off track.

The goal is not to touch the money except in a real emergency. If you have it at the ready when you really need it, it should last long enough to get you back on your financial feet.

Putting it Together

To create your emergency fund, multiply your monthly take-home pay times six to find the amount you should ideally save.

It’s usually not practical or possible to create a fully funded emergency fund in one shot. Instead, plan to add to it on a regular basis, in an amount you can reasonably afford, until it reaches your goal value. You might consider adding it as a line item in your monthly budget, just as you may do when you put aside a percentage of your income to add to a savings account or your investment portfolio.

If you do have to dip into the fund, it’s important to start building it back up as soon as you have the resources to do so.

Did you know Educators Credit Union has a free library full of calculators that you can use to get closer to your goals? There is even one to calculate emergency savings. Check it out at

Where the Money Should Be

The whole point of an emergency fund is that you should be able to get your hands on the money quickly, and without risk of losing money by using those funds, which might be the case if you had to sell off stocks or other investment holdings.

A standard savings account makes good sense as a place for your emergency funds. It is a straightforward way to put away money that you can easily access. A bonus is that the balance in a savings account can even earn you interest, giving you access to more emergency funds.

The one drawback with a savings account is that it is almost too easy to access. You’ll have to make a commitment to not touch the money except in a true emergency.

As a member of Educators Credit Union, you already have a Prime Share Savings account that only requires a minimum balance of $5 to maintain. You also have access to a handful of other savings accounts to help you fund your emergency savings faster. To view the types of savings accounts, visit

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