Rethinking Emergency Funds

How to Save for the Real Emergencies in Your Life

Building an emergency fund sounds simple in theory — until you try to do it in real life. For years, I understood the concept of a financial safety net, but I struggled to keep my emergency fund intact. I dipped into it for non-emergencies, convinced I’d “save more later.”

If you’ve been there too, you’re not alone. Many people want financial security but feel stuck on how to actually build it.

Below, I’ll show you a more practical, human way to think about emergency funds, along with clear categories, examples, and steps to make saving feel doable instead of overwhelming.

What Is an Emergency Fund?

An emergency fund is money set aside for unexpected expenses, the urgent, unwanted situations you didn’t plan for. But what qualifies as an emergency varies widely.

Your emergencies might look different from mine. For example:

• I live close to family.

• I own both a house and a car.

• I don’t have children or pets.

Someone else might have more dependents, fewer safety nets, or different responsibilities. That means the emergencies they need to prepare for will differ.

Why You Need an Emergency Fund (Expect the Unexpected)

Emergency funds exist to protect you when life throws something unpleasant your way — an ER visit, a sudden car repair, a tree on your roof, a job loss, or any major unexpected expense.

We save for:

• Peace of mind

• Reduced financial stress

• Security during unpredictable moments

And yet, despite the benefits, research shows that many adults are unprepared. Bankrate reports that only 41% of U.S. adults can cover a $1,000 unexpected expense from savings.

Why Saving for an Emergency Fund Is So Hard

I technically had an emergency fund for years. But 90% of the time, I didn’t use it for emergencies at all. I used it to pay credit card bills. I used it for impulse buys. I used it because it was there.

Why?

Because “emergency fund” was too abstract. It didn’t feel real or specific. I told myself I’d replace the money later. When I added more to my emergency fund, I’d just use it again. I cycled between “why bother” and guilt for spending it. It was a vicious cycle.

Once I shifted how I named and organized my savings, everything changed. I stopped dipping into my emergency fund because I created more concrete, meaningful categories.

Your New Emergency Fund System

Instead of one vague emergency fund, break your savings into more realistic, clearly defined emergency fund categories. This makes it easier to know:

✔ what you’re saving for
✔ how much to save
✔ when it’s actually okay to spend it

Below are the categories to consider and what to think about for each one.

1. Car Repairs

Car repairs are one of the most common unexpected expenses. Unless you’re very lucky or frequently get a new car, you will need money for car repairs.

Consider:

• the age and mileage of your vehicle

• the average cost of repairs in your area

• how often your car has needed maintenance in the past

2. Dental & Medical Emergencies

Medical costs vary widely depending on:

• whether you have dependents

• your insurance coverage

• your existing conditions

If you’re responsible for the health needs of children or family members, save more.

3. Emergency Travel

Think through:

• who you would travel to in a crisis for instance do you have college-aged kids or aging parents

• how far away they live

• whether you’d need same-day or next-day flights

• will you need hotel or other accommodations like a car rental

• don’t forget food and other necessities

Emergency travel can be very expensive — planning ahead reduces stress.

4. Home Repairs & Home Emergencies

If you own a home, this category is essential.

Save for:

• plumbing issues

• roof repairs

• appliance breakdowns

• electrical problems

• storm or weather damage

Even renters need some savings here — not everything is covered by landlords.

5. Income Reserve (Job Loss or Variable Income)

This is a different kind of emergency: loss of income.

Include essentials like:

• rent or mortgage

• utilities

• food

• transportation

• insurance

• medication

If you have a variable income (like coaching, freelancing, or gig work), this category is non-negotiable.

6. The Unexpected (A True “Rainy Day Fund”)

This is a catch-all category for what doesn’t fit neatly anywhere else. Life happens — and you can’t plan for everything.

This was the first category I funded, and I recommend starting here. I keep $1000 in mine.

Other Categories to Consider

Depending on your life circumstances, add:

• Pet emergencies

• Additional property or vehicle repairs

• Natural disaster evacuation fund (especially if you’ve been evacuated before)

What Is Not an Emergency?

To protect your emergency fund, be clear on what isn’t an emergency:

Not Emergencies:

• routine car maintenance

• expected tire replacements

• predictable appliance replacements

• clothing replacements

• annual expenses you could plan for

If you know it’s coming — even years away — it’s a sinking fund, not an emergency.

Emergency Funds Are NOT Enough: Here Are Two More Safety Nets You Need

To stop dipping into your emergency fund, add two additional layers:

1. A Miscellaneous Category

A small ($25–$50) buffer in your checking account for random “life happens” moments:

• surprise fees

• forgotten expenses

• minor overages

• unexpected small purchases

Maybe you’ll want to keep more money in this category. Start small. You can always add more later if you realize that fits your life better. The category is your first line of defense in preventing unnecessary withdrawals from your emergency fund.

2. A Savings Buffer

Keep $250–$500 in your everyday savings account. I use the savings account linked to my checking account. I don’t like keeping too much money here as it’s not a high yield savings account (HYSA), but it’s easy to access if the money is needed.

A small monthly transfer to this account is especially helpful if your bank requires minimum balances. I transfer $25 per month which is the minimum for my bank. When the balance reaches $500 I will transfer to balance to a sinking fund or my HYSA.

Where to Keep Your Emergency Savings

Speaking of high-yield savings account, store your true emergency fund in one so it grows while staying easily accessible. Your buffer and miscellaneous categories can stay in checking or basic savings.

There are several options for HYSA. I use Ally Bank but do your research what fits your preference and lifestyle.

I also keep track of my emergency fund outside of my YNAB spending plan. I find the “out of site, out of mind” method works better for me. YNAB, or You Need A Budget, is a budgeting app and method that I use and coach. I love it so much I became a certified YNAB coach. More on my services here.

Make Saving a Habit (Start Small, Stay Consistent)

You don’t need to save for every category at once. If you’re saving for home repairs but a family member needs help, use the money. That’s what it’s for.

If you don’t have an emergency fund yet, and feel it’s too overwhelming, start small:

• $1 a week

• $5 a month

• whatever you can manage

In the beginning, building an emergency fund is less about the amount and more about the habit of saving.

Expect the Unexpected — and Trust Yourself

Saving for emergencies isn’t about living in fear. It’s about feeling grounded and prepared.

Call your fund whatever works for you — emergency fund, rainy day fund (This is the one I use), safety net fund. You’re in charge.

Most of us will be saving for a long time, and that’s okay. Start where you are. Save what you can. Adjust when life changes.

Your financial peace is worth it. You’re worth it. You got this.