I am always talking about how to save money so I thought I would talk about my Emergency Fund here for a little bit. You hear personal finance bloggers talking about the Emergency Fund all the time and in some cases it sounds very complicated.

In reality it is really easy to set up and maintain an Emergency Fund and once you get it started it requires very little effort on your part.

How Much Money to Save

The first thing you need to do when setting up your Emergency Fund is to decide how much you want to keep in it. You can use different methods to calculate the optimal amount required for you, whether that be three months of living expenses, six months of income or a set amount.

I decided to have my Emergency Fund be a set dollar figure instead of trying to mess with the complicated calculations. Generally people have decided on $1000 as a reasonable figure for an Emergency Fund if you are just going to pick a number. I hope that I do not have an emergency that is going to cost that much but that is a target for me right now.

Where to Save Money

I decided to save my money using ING because it was simply one of the best online savings accounts I could find. They offered well over 3% interest at the time I started my Emergency Fund so earning that interest on the money I had in my savings account was a plus for me.

There are many other places you could store your Emergency Fund but just make sure that it is somewhere that you can get to it quickly if you need to, as well as being in an interest bearing account.

When To Save Money

The next step you need to take is to decide when to save your money. By this I mean that you need to decide how often you are going to send money to your Emergency Fund in order to make your money grow.


You can decide to send in money every month, every week or every paycheck if you do not get paid a regular salary. You can also snowflake a few irregular payments to the savings account and that will help it to grow even faster!!!


In my case I am sending money to the Emergency Fund at ING every month because that schedule works for me.

Save Money Automatically

In order to have the best possible experience with your Emergency Fund you make the money saving process automatic. You need to have the money taken out of your other account and sent into the Emergency Fund through some type of FREE automatic transfer so that you never have to bother with it.

Again, ING makes this easy for you since there is no fee for the transfers. If you use another ING account to make the transfers from then the money is available on the day of the transfer so you do not even have to wait a few days for the money to clear.

Forget Your Money

The final step in making your Emergency Fund work for you is to forget it . That’s right, I said you need to forget the Emergency Fund once you have everything set up correctly. You do not need to spend time thinking about the Emergency Fund because it is not a Daily Fund . It is something that you should only be concerned about in times of an actual emergency so just ignore it for the most part.

Of course you will want to check on your Emergency Fund at least once a month just to make sure all of the deposits are being made and also to check on how much interest you are getting since we all know how much interest rates can fluctuate.

Now that you are all set all you have to do is watch the money in your Emergency Fund grow as you send in more deposits and also earn interest on the balance. Do you have an Emergency Fund? How did you set it up? I would love to hear from you.