How to Build and Grow an Emergency Fund

Artemis & Leto, Artemis and Leto, emergency fund, emergency fund challenge, 4-week emergency fund challenge

Far too many retirees and seniors are living on the edge of financial ruin. The first line of defense is to build and grow an emergency fund. Read on to learn more.

Disclaimer: We are not financial professionals, and this article is intended only to educate and inspire, not to provide specific advice about your specific personal financial situation (so don’t call the lawyers).

Part 2 of “How to Invest – Safely and Smartly – During the Retirement Years”

All my Mom needed was $300 to get her car brakes replaced. That might not be much to someone with a decent full-time job, but to a retiree on a very tight budget, it might as well be $1,000,000.

Living in a small town, my Mom has limited public transportation options. Without a functioning car, she’s pretty much stuck. She can only run essential errands like grocery shopping, and she has had to stop visiting family and friends. As we get older, lacking just $300 can have serious consequences to our health, mobility, social life, etc.

This is why my Mom and I are now slowly but surely building up her Emergency Fund. As the name states, it’s money set aside to cover unexpected expenses like car repairs or health emergencies. Here’s what we’ve learned so far:

Start Small

Much information about Emergency Funds centers around saving x number of months of your living expenses or your income. That’s great, but for many folks that’s a very big number: thousands, tens of thousands. It can be emotionally overwhelming and seem practically unrealistic.

If you currently don’t have an Emergency Fund, don’t feel bad – many people don’t! My Mom literally had $0. But, that just means that she had to start small.

We thought that $100 would be a realistic and worthwhile first savings goal. It’s not so much that it would impact her monthly cash flow too much, but not so little that it wouldn’t help in an emergency. For instance, it’s a third of what she needed to get her car brakes fixed; it’s enough to have probably made the difference between doing the repair right away or having to wait.

Make a Plan

Regardless of how much you decide to save for your first Emergency Fund goal, you’ve got to plan how you are going to get there. Take a look at your budget (monthly income and expenses) and assess how much you can set aside. Maybe there’s already some extra money at the end of the month, or maybe it’s necessary to cut some non-essential expenses.

In some cases, like with my Mom, the budget is already so tight that saving more than $25 a month would be a hardship. Do what you can, even if it’s just $5 or $10 a month. It will add up, trust me.

In addition, adult children and/or other working relatives can pitch in. Along with saving into my own Emergency Fund and for retirement, I’m adding what I can to my Mom’s Emergency Fund.

Bear in mind, if you are going to help out your aging parents financially, ensure that you’re properly taking care of your own finances first. This isn’t out of callousness or anything. You’ve got to put your own life-vest on first, or eventually you won’t be able to help anyone. Self-care – including financial – is imperative #1 for any caregiver! (There are exceptions of course, such as when an aging parent’s situation is dire and/or life threatening.)

Stash it Right

Emergency Funds need to be very accessible. This makes savings accounts (at the same credit union or bank as your checking account) a great place for an Emergency Fund. Money can easily be transferred from your savings to your checking, which can then be withdrawn using your debit card or a check when an emergency expense comes up.

We are passionate about saving money, so we’ve written an article about why you should fall in love with credit unions, check it out!

Another good option, particularly as your Emergency Fund grows, is a Money Market Account. Either use one at the same credit union or bank as your checking and savings accounts, or make sure that it offers debit or check writing. Remember, quick and easy access is very important.

Having just said that, the larger your Emergency Fund gets, the more you can go after higher returns (better interest rates). You always want to have a certain minimum amount that is accessible at a moment’s notice. Any money above this can be invested in slightly less accessible ways if it means a higher interest rate (but make sure it’s safe; you want to maintain a Protective Portfolio).

Another place to consider is a Money Market Mutual Fund. This is different from a Money Market Account. (In another article in this series, we take a closer look at Money Market Accounts versus Money Market Mutual Funds.) Money Market Mutual Funds sometimes come with debit or check writing options, so they can be a best-of-both-worlds place to keep Emergency Fund money.

Certificates of Deposit (CDs), particularly within a well-designed ladder system, can also be a good option. However, this is more complicated. You have to be more attentive to ensure that your system is functioning, especially when an unexpected expense pops up.

In an upcoming article in this series, we go over CDs and CD laddering.

No matter where you decide to keep your Emergency Fund, make sure that it’s super safe and easily accessible.


Once you’ve reached your first (modest but worthy) goal, just set another equally obtainable goal. Repeat as needed. Ultimately, you will need to decide how much you want to have in your Emergency Fund in total. This will be a pretty big number, so it could take years. Don’t worry about how long it takes. The important thing is that with every dollar you save, you are increasing financial security. More financial security means higher quality of life (less stress!).

To help your aging parents – and/or you, too! – reach your first Emergency Fund goal, we are launching our 4-Week Emergency Fund Challenge! Give your Emergency Fund savings habit a kick in the pants! Check it out and take the Challenge!

And don’t forget to join our email list.

–Good luck, we’re all gonna need it!

Comments 3

  1. Pingback: Special Article Series: How to Invest - Safely and Smartly - During the Retirement Years - Artemis and Leto

  2. Pingback: An Introduction to Money Market Accounts and Funds for Retirees | Artemis and Leto

  3. Pingback: How Traditional and Roth IRAs Might Fit into Your Retirement Investing Strategy | Artemis and Leto

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