After looking at your finances and seeing some places you could maybe cut back, your next goal is to build an Emergency Savings Account.

Once this account gets to a certain amount it should only be touched in case of well, an Emergency. Money that you need to pull together at a moments notice like your car breaks down, your kid gets sick or you get evicted and need a down payment. Everyone’s Emergency Fund is going to be different depending on your family size and even what job you have.

In the military we tend to be more “secure” in our paychecks. For the most part we know exactly how much, when and where we are getting paid. And even for how many more years! Believe it or not, that is not a luxury most Americans have today. We can have a smaller Emergency Fund than others because we are guaranteed a paycheck every 2 weeks regardless of what happens.


Because I am a single guy with no dependents, my Emergency Fund is roughly $10,000. Worst case scenario in my life, I could make that stretch for 3+ months if need be. You might be different so figure out how much you will need and work on getting to that Emergency Fund as your first step in savings.

To establish how much your Emergency Fund should be, calculate how much you would need to live off of if you were to be laid off for 3-6 months. This includes:

  • Rent
  • Car Payment(s)
  • Groceries and Other Household Goods
  • Cell Phone(s)
  • Alimony
  • Child Payments

Basically anything were you are screwed if you don’t pay it.

Lets say you save your $10,000 and a month later your car breaks down and you have to pull $600 from your Emergency Fund. That $600 should be the first thing replaced ASAP so that your Emergency Fund is back to it’s constant point of $10,000. No other investing or Big Chunk Debt payment should be done before you have emergency money set up for yourself.

Bunts, where should I keep my Emergency Fund?

I suggest simply using your Savings Account through your primary bank as your Emergency Savings Account. It should be easily accessible at a moments notice. Do not tie up that money in Mutual Funds, Stocks, Bonds or “CDs”, it will only be more of a hassle if you need it. Hell keep it in your mattress if you want, just have it ready.

-Matthew Bunting (Bunts)