2025 Holiday Prep: Add to Your Emergency Fund

Everybody faces unplanned expenses from time to time. Maybe it’s a car repair, an unexpected medical emergency, a broken appliance, or a loss of income. When those things occur, an emergency fund is the best way to manage the expense without having to take on high-interest debt or lose progress on other financial goals.

By building an emergency fund, you’ll have one less thing to worry about in trying times. In a recent survey of Growth Savings customers, 70% said building an emergency fund was one of the actions that helped them feel proud of how they manage money.

But how can you build an emergency fund while still managing all your other expenses, splurges, vacations, and the upcoming holiday season? The key is setting the right goal for your financial situation and making consistent progress to meet that goal.

Consider these three steps to take now.

You need to know how much you spend regularly to figure out how much you might need in an emergency. Tally all your regular monthly expenses, including housing, food, healthcare, utilities, and other bills.

If you pay other bills less often, add the monthly portion of those bills. For example, if you pay car insurance every six months, divide that total by six and add the quotient to your monthly total.

For the purposes of your emergency fund, focus only on required expenses. You don’t have to include discretionary spending, such as entertainment or dining out.

Most financial experts recommend having at least three months’ worth of expenses in your emergency fund. But for some people, it makes sense to save even more. For example, if your job isn’t very secure, you don’t have a steady income, or you have a serious medical condition, it’s probably a good idea to sock away at least six months’ worth of expenses or more.

This figure really depends on your personal situation and what it will take for you to feel secure. Whatever that figure is, consider setting a monthly recurring deposit to help you get there. For many people, it takes a few to several years to build a solid emergency fund. But with a recurring deposit, you can be sure you’re making progress toward that goal every single month along the way.

Consider keeping your emergency fund in a low-risk, high-yield cash account so that you can protect your savings and have easy access to it when needed. For example, Growth Savings is a high-yield savings account with FDIC protection, no fees, and unlimited transfers.

As you build your emergency fund, try to stay committed to leaving the money alone unless you have an actual emergency. But when an emergency expense arises, don’t feel guilty about turning to your fund. That’s why you have it.

For most people, emergency funds will ebb and flow over the years. Your monthly expenses could go up or down. You might have to withdraw (and later replace) funds. Or you simply might realize you need a little more saved to feel secure.

It’s a good idea to revisit your numbers about once a year or anytime your financial situation changes significantly. Along the way, you can feel confident knowing you’re tackling one of the most important financial goals.

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.