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Money

How much to save, starting small

Start with a small first goal, sized to the kind of surprise bill you've actually had before. Put it in a separate savings account, and grow it from there.

Easy15 min to doFree

You'll need

  • A rough idea of surprise expenses you've had
  • A savings account, separate from checking

Do it like this

  1. Think about the surprise expenses you've had before (a car repair, a doctor visit, a phone screen) and roughly what they cost. The CFPB suggests starting there (CFPB).
  2. Pick a first goal around that size. Small and reachable beats big and abandoned.
  3. Keep the money in its own savings account so it doesn't blend into spending money.
  4. Set up an automatic transfer on payday, even a small one.
  5. Once you hit the first goal, set the next one higher.
Watch out. Decide ahead of time what counts as an emergency. A sale is not an emergency. A tow truck is.

See it done

Saving wisely: emergency fundKhan Academy · Length 2:28 · 2023

Video blocked on this network? You don't need it. The written steps above are the whole lesson, and the video is extra. Watch it on YouTube later.

If it doesn't work

  • If you can't spare anything this month, start with a tiny amount. The habit matters more than the number at first.
  • If you keep dipping into it, move it to a bank that's a little harder to reach from your phone.
  • If you used it for a real emergency, good. That's what it's for. Restart the automatic transfer the next payday.

Good to know

What an emergency fund is for

An emergency fund is cash set aside for unplanned expenses or financial emergencies (CFPB). It keeps one bad week from turning into credit card debt.

Use your tax refund

The CFPB suggests one-time money, like a tax refund, as a way to give your savings a boost (CFPB).

Put saving in the budget

Listing savings as one of your monthly expenses makes it harder to skip (consumer.gov).

Sources

  1. Consumer Financial Protection Bureau An essential guide to building an emergency fund
  2. Federal Trade Commission Making a budget (consumer.gov)
  3. Federal Deposit Insurance Corporation Money Smart

Lesson M3.2 · Last checked October 2, 2026 against the sources listed. See a mistake?