Money · Emergency fund

How much to save, starting small

Set your first goal at the size of a surprise bill you've actually had (a car repair, an uninsured doctor visit, a cracked phone), not an abstract number. Keep it in a separate FDIC-insured savings account, insured up to $250,000. Feed it automatically every payday plus a share of any tax refund or cash gift. Once you hit the first goal, aim for the FDIC's longer target: at least six months of living expenses. Decide now what counts as an emergency, use it without guilt, then refill it.

Easy15 min to set upFreeChecked October 2, 2026

You'll need

A list of surprise expenses you've had in the last year or two, and what each cost
A savings account separate from checking
Your pay schedule and take-home pay

What to know

Know what it's for. An emergency fund is cash set aside for unplanned expenses that aren't part of your routine monthly spending: car or home repairs, medical bills, or a loss of income. Source: CFPB¹
Size your first goal from your own life. Think about the most common surprise expenses you've had and what they cost. That's a realistic first target. Source: CFPB¹ Write the number down.
Set the long-term goal. The FDIC suggests building toward at least six months of living expenses to get through something like a job loss, a major car repair or medical bills insurance doesn't cover. Source: FDIC² If your basics cost $1,800 a month, that's $10,800. Don't let that number stop you from starting.
Open a separate account. The FDIC suggests keeping emergency savings in a separate FDIC-insured savings account, not checking, so you're less tempted to spend it. Source: FDIC² FDIC insurance covers at least $250,000 per depositor, per insured bank, per ownership category, and no depositor has lost a penny of insured funds since 1933. Source: FDIC³
Make it automatic. Set a recurring transfer from checking to savings, or split your direct deposit so part goes straight to savings. Source: CFPB¹ The FDIC calls this paying yourself first, because you save before you're tempted to spend. Source: FDIC² Details are in Automating your savings.
Add one-time money. A tax refund is one of the biggest checks many people get all year. Saving all or part of it, or a birthday or holiday cash gift, can build the fund fast. Source: CFPB¹
Watch it grow. Turn on balance alerts or keep a running total. When you reach a goal, celebrate, then set the next one. Source: CFPB¹

Watch out Decide ahead of time what counts as an emergency, and stay consistent. Source: CFPB¹ A sale is not an emergency. A tow truck, a medical bill insurance didn't cover, or a gap between jobs is.

How fast small amounts add up

Simple math for a paycheck every two weeks (26 a year), before any interest.

Each payday	After 6 months	After 1 year
$10	$130	$260
$25	$325	$650
$50	$650	$1,300
$100	$1,300	$2,600

The CFPB has a free savings planning tool to figure out how long your goal will take.

One way to step it up

Goal 1: the cost of your most common surprise bill
Goal 2: one month of basic expenses: rent, utilities, food, transportation, minimum payments
Goal 3: three months of basic expenses
Goal 4: at least six months of living expenses, the FDIC's suggested target Source: FDIC²

Where to keep it

Options the CFPB lists, plus the FDIC's coverage rules. Source: CFPB FDIC¹³

Place	Good	Watch out
Savings account at an FDIC-insured bank or a credit union	Generally one of the safest places for money	Check that the bank is FDIC-insured with the FDIC's BankFind tool
Prepaid card	You can only spend what's loaded	Not a bank account
Cash at home or with someone you trust	Available right away	Can be stolen, lost or destroyed

FDIC insurance doesn't cover stocks, bonds, mutual funds or crypto. Source: FDIC³

See it done

Video by Khan Academy Nonprofit

Saving wisely: emergency fund

Watch on YouTube: Saving wisely: emergency fund | Financial mathematics (TX TEKS) | Khan Academy

Full title on YouTube: “Saving wisely: emergency fund | Financial mathematics (TX TEKS) | Khan Academy”2023 · Checked October 3, 2026

Video won't load at school or work? No problem. Everything you need is in the steps; the video's just a bonus. Watch it on YouTube later.

If it doesn't work

If you can't spare anything this month, start with any amount you can afford, no matter how small, and raise it when you can. Source: FDIC²
If your pay changes week to week, track when money comes in and goes out. You may be able to ask your landlord or utilities to move due dates, and save extra in the weeks you have more. Source: CFPB¹
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, and it beats putting the bill on a card where interest and fees can make it much bigger. Then make a plan to refill it. Source: CFPB FDIC¹²

Good to know

The details, if you want them. Tap a line to open it.

Why it matters

Without savings, even a small shock can turn into debt that's hard to pay off, or make you pull from retirement money. Source: CFPB¹

After the emergency fund

For goals years away, the FDIC points to CDs and U.S. Savings Bonds, which usually earn more because you agree not to touch the money for a while. Also look at retirement savings at work, especially if your employer matches. Source: FDIC²

Take it with you

Printable card Download card (PDF)

Sources

Consumer Financial Protection Bureau An essential guide to building an emergency fund
Federal Deposit Insurance Corporation Starting small can lead to big savings
Federal Deposit Insurance Corporation Understanding deposit insurance

Lesson M3.2 · Last checked October 2, 2026 against the sources listed.

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