The beginner’s guide to building an emergency fund

Because life is unpredictable and a major expense is one accident away, popular wisdom maintains that all adults should have an emergency fund. Arbiters of such conventional advice claim these emergency funds should be stocked with three to six months’ worth of expenses. But this threshold can be unattainable — and perhaps unrealistic, especially for young people just starting out or for those living on lower incomes.

“It’s just an impossible amount for a lot of people,” says Kimberly Palmer, a personal finance expert at NerdWallet, “and can just feel so overwhelming that you don’t take any steps at all, and you just think, I can’t make any sort of emergency fund.”

Even saving a couple hundred bucks can be a huge burden for many people. Only 41 percent of Americans over 18 say they would pay for an unexpected expense — like $1,000 for an emergency room visit or car repair — from their savings, according to Bankrate’s 2025 Emergency Savings Report. (Others said they would borrow money or put the expense on a credit card.) Meanwhile, 27 percent of adults have no emergency savings, as of May 2024.

In reality, any amount you’re able to save is better than nothing. But what if you’ve just gotten your first job and are starting from scratch? Or what if you’re living paycheck to paycheck? Should you prioritize paying down debt over an emergency fund? Given all the competing demands on our finances, here’s how to really kick off your emergency fund, according to the experts.

Write a list of your financial priorities

Chances are, an emergency fund isn’t your only pressing financial matter. You’ve got bills to pay, a retirement account to contribute to, perhaps student loans or other debt to chisel away at. Palmer suggests making a list of all your financial priorities and goals (including fun ones, like saving for a vacation or down payment) and organizing them, starting with the most urgent.

Because you can’t prioritize all of these goals at once, Palmer recommends choosing one to focus on at a time. First, make sure you’re making the minimum payments on your credit cards and student loans. Then, if you don’t have any money in an emergency fund, you might want to put focus there, she says. “Generally speaking, it can make sense to make your number one priority [to] have at least a minimum amount in your emergency fund, like $500,” she says. Next, pay off debt, especially those with high interest (like credit card debt). After that, try to put some money into your retirement account. Finally, squirrel some cash away for longer-term goals, like that vacation.

As for the amount to put into your emergency fund at first (and this goes for all of your other financial priorities too), Palmer suggests starting small but attainable. Again, $500 might be a good place to start. After you hit that threshold, move onto another priority.

For longer-term goals like retirement savings, you may want to set smaller benchmarks initially, too, so you can more quickly transition back to stocking your emergency fund, says Lynnette Khalfani-Cox, a personal finance expert and author of Bounce Back: The Ultimate Guide to Financial Resilience. “That 401(k) is not going to buy your groceries,” she says, “and the retirement funds are not going to be able to help you to fix the tires if you get a flat or a short term event happens.”

The goal isn’t to totally ignore these other forms of savings, but to be prudent until you have a solid emergency fund. “While saving for retirement is important, we want you financially prepared for emergencies before you’re financially prepared for the ‘big stuff,’ because emergencies can come out of the blue,” Tori Dunlap, founder and CEO of the financial platform Her First $100K, said by email. “That safety net will help you sleep better at night while you work towards saving for retirement.”

Once you’ve made your way through your priority list, start at the top again. By cycling through each of your goals, you’re able to make simultaneous progress throughout the year.

Find ways to free up some cash to put toward your emergency fund

If you’re wondering where this money is going to come from, you’ll need to be intentional. To kick-start your savings, Khalfani-Cox suggests purging your home and closet of items you could sell at a consignment shop or at a yard sale.

Then, look at your variable expenses — money you spend on entertainment, subscriptions, food, personal care, and pets; not utilities, rent, or car payments — and see where you can cut back, Palmer says. “Food is a really helpful category to zero in on,” she says. “It can be really expensive if you’re ordering takeout or going to a restaurant.”

Try shopping at a budget grocery store if you can and preparing food at home. You might consider forgoing a few personal grooming appointments, too. Are there any streaming services you’re willing to part with? Maybe you limit your concert attendance to one big ticket event a year.

You don’t need to make these sacrifices forever, but if you can cut back on these kinds of expenses, you’ll be able to save quicker. “It may not be the most glamorous thing ever, but it’s going to help get you where you need to go,” Dunlap says. “Start by tracking your monthly income and expenses, finding areas where you can be more strategic with your spending, and using that extra bit to pour into your emergency fund. Even if that’s an extra few dollars here and there, we’re getting somewhere.”

If you have nothing left to pare back, that’s okay, too. Make sure you’re focusing on the essentials — basic needs like housing, food, and transportation — and come back to savings when you’re able.

Whatever you can set aside is a step in the right direction, experts say. Even $10 a week is more than you had yesterday. Just remember to keep it going. “You’re building financial discipline,” Khalfani-Cox says. “You’re building consistency.”