How to Start Your Emergency Savings Fund in 3 Simple Steps
An emergency fund creates a buffer between you and life’s unexpected expenses. Instead of turning to credit cards or loans, you’ll have savings to cover surprise costs while staying focused on your long-term goals.
You don’t need to save a large amount all at once. Small, steady contributions can build over time. Get started with these strategies:
1. Set a Realistic Goal
Think about the kinds of expenses that come without warning. Car repairs, medical bills and home maintenance are common examples. A good starting point is to save enough to handle one or two of these situations.
Not sure how much you can set aside? Use the budget tool in myVRS Financial Wellness to track your income and expenses. Log in through your myVRS account to save your work and track your progress. The tool helps you see where small changes in spending can free up money for savings.
Start small to build up. Setting aside just $25 from each paycheck can create a meaningful fund over the course of a year. If you have more room in your budget, consider working toward three to six months of essential expenses as your eventual target.
2. Automate Deposits
The simplest way to stay consistent is to make saving automatic. Most banks and credit unions let you schedule recurring transfers from checking to savings. You may also be able to split your direct deposit so part of your paycheck goes straight to a savings account. Consider a high-yield savings account where you can also accrue interest.
Your emergency fund should be easily accessible but separate from your everyday spending money. This keeps the money safe and available when you need it, but not so convenient that you’re tempted to dip into it for non-emergencies.
Try saving a percentage of your paycheck rather than a fixed dollar amount, so your contributions grow with your income.
3. Use Windfalls to Boost Your Fund
Instead of treating bonuses and cash gifts as "fun money," consider putting some or all of these funds toward your financial safety net.
Tax refunds are another avenue for savings since many people receive them each spring. Even putting just half of your refund into savings can jump-start your fund considerably. Better still, take a fresh look at your tax withholdings to avoid overpaying, and instead save that money up front through pretax contributions to your Hybrid 457 Plan or another supplemental savings plan.
Think of your emergency fund as insurance against financial surprises. Use it for genuine unexpected expenses, not for predictable costs like annual insurance premiums or planned purchases like vacations.
Tap your fund for urgent repairs, unexpected medical bills not covered by insurance or temporary income loss. The goal is to avoid going into debt when life throws you a curveball.
Don’t worry if you need to use some of your fund for unexpected expenses. That’s what it’s for. Just restart your savings plan to build it back up again.
Ready to Learn More?
Access a library of educational resources through myVRS Financial Wellness, including a course on setting up an emergency fund. Log in with your myVRS account, then dive deeper with personalized action plans, calculators and other tools designed for your needs.
Read more: Reach Your Next Savings Goal With 5 Simple Steps.
