Lesson 7 of 10

How to start an emergency fund

An emergency fund is cash saved for surprises.

A car repair. A doctor's bill. A broken phone.

Without one, surprises go on a credit card. That's how debt starts.

Start with a small goal. A common first target is $500 to $1,000.

Keep it in a separate savings account, so you don't spend it by accident.

Example: small amounts add up

$10 a week for a year$520

$20 a week for a year$1,040

$40 a week for a year$2,080

The $500 to $1,000 first goal is a common rule of thumb, not a law. Any amount helps.

Key idea

Set up an automatic transfer on payday. Money you never see is money you don't miss.