Change the Way You Think about Emergency Savings

Emergency (noun) – a sudden, urgent, usually unexpected occurrence or occasion requiring immediate action.

Here’s the thing about emergencies: you can’t plan for them. Not really. Life is filled with too many variables to ever properly plan for any one specific emergency. But just because you can’t plan for an emergency, doesn’t mean you can’t prepare.

A 2014 study from Bankrate.com found that 26 percent of Americans don’t have an emergency fund of any kind. An emergency fund is one of those things we all generally agree we should have, but mostly ignore when we’re trying to make do on a tight budget.

That’s understandable. The idea of building an emergency savings account is pretty daunting when you’re already struggling to make ends meet. You look at the amount you’re supposed to have saved (3 to 6 months’ worth of expenses!) and you’re defeated before you’ve even started. And even if you can find some money to set aside, the fact that this money is earmarked for emergencies only (which are pretty much exclusively no fun to experience) makes motivation difficult.

But maybe we’ve been thinking about emergencies the wrong way.

Emergencies in all shapes and sizes

By definition, emergencies are unexpected and require our immediate attention, but when we think about emergency saving we’re often thinking about catastrophes. Enormous emergencies. Life-changing events.

In reality, most of the unexpected financial setbacks we face in life are relatively small, but when we aren’t prepared they can feel Earth-shattering. When money’s tight, a blown tire or a broken window can seem completely unmanageable. In those moments, you don’t need thousands of dollars – you just need a little flexibility in your budget.

If you feel completely unprepared for any sort of unplanned financial deviation, consider implementing some of these changes to your emergency savings philosophy.

Just save – Rather than creating a separate emergency savings account, just focus on saving as much as you can. Don’t think of the money you’re setting aside as “rainy day” money. Think of it as “any day” money. Allow yourself to use some of that saved money on personal goals, like vacations or important purchases, but leave the rest untouched and available for the unexpected.

Understand the outer limits of your budget – If you trimmed your budget all the way down to only the most essential parts, you’d be living a pretty spare existence. That might be difficult to maintain on a monthly basis, but in an emergency situation it can be incredibly handy to know how to immediately reduce your expenses to their absolute minimum. Experiment with your budget by focusing on one particular category at a time and attempting to minimize your spending.

Focus on stability – It’s a hard feeling to describe unless you’ve felt it yourself, but when you’re on the financial edge, any little setback is absolutely crushing. When you’re not on the edge, though, those same little setbacks instantly fall back into proper perspective. A big emergency savings account is definitely great protection against major setbacks, but your first and best defense against the unexpected is smart, steady money management. By maximizing your income, minimizing your expenses, and making thoughtful, informed decisions about your money every day, you’re much better equipped to roll with the unexpected challenges life sometimes throws your way.

You can never really know what kind of trials and tribulations you might soon be facing. If you aren’t quite prepared for a total financial fallout, don’t panic! Rather than worry about the dedicated emergency savings account you don’t have, focus on the small changes you can make every day to strengthen your personal finances. Just like a healthy body is better able to fight infections, healthy money management gives you the best chance to quickly and painlessly overcome the unexpected.

  • Better Business Bureau A+ rating Better Business Bureau
    MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • Trustpilot Trustpilot
    MMI is rated as “Excellent” (4.8/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • Consumer Federation of America Consumer Federation of America
    MMI is a member of the Consumer Federation of America (CFA), an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • Department of Housing and Urban Development Department of Housing and Urban Development
    MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • Council on Accreditation Council On Accreditation
    MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • National Foundation for Credit Counseling National Foundation for Credit Counseling
    MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.