The Emergency Fund Question…Reframed

“Build an emergency fund” is one of the most common pieces of financial advice out there. And yet, for something you hear so often, it comes without a ton of context. 

Do you really need one? How much is enough? What are you supposed to do with your money in the meantime if you’re also trying to pay off debt or invest? For a lot of people, it ends up feeling less like a clear next step and more like another box they’re supposed to check. 

Maybe you’ve tried to build one before. Maybe you’ve moved money into savings only to end up using it again a few months later. Or maybe you’ve looked at the “three to six months of expenses” guideline and thought: there’s no way I’m getting there anytime soon. The tension is normal. Because an emergency fund isn’t really about hitting a specific number. It’s more about what that money does for you when something unexpected happens. 

Let’s walk through it. 

What is an emergency fund, really? 

At its core, an emergency fund is simply cash set aside for things you didn’t plan for, not expected expenses like annual subscriptions or holiday bills. But the moments that catch you off guard: job transition, medical expense, car repair, a stretch where income and expenses don’t quite line up. It’s less about the category of the expense and more about having a buffer that doesn’t follow any script. 

Why it matters 

Without the buffer, unexpected expenses often spill into other areas. You may need to lean on a credit card. You may pause long-term investing. You may feel like you’re constantly adjusting just to stay on track. 

An emergency fund doesn’t remove those moments, but it can change how you experience them. It may provide more space to make a decision instead of having to react under pressure. 

How much is enough?  

This is where most advice jumps straight to the rule of thumb: three to six months of expenses. If you’re a single-income household, six months is often suggested. If you’re a dual-income household, three months. While it’s a helpful benchmark, it can also feel overwhelming—especially if you’re starting from zero. 

A more useful approach: think in stages. 

What would it look like to have a small cushion in place? Maybe $1,000. Or one month of essential expenses. Something that just creates some breathing room. From there, consider building toward a larger reserve over time. The appropriate amount depends on your situation: Stable, predictable income? Might feel comfortable with less. Income fluctuates or you value more certainty? Might consider building a larger buffer. 

The goal isn’t to land on a perfect number, it’s to move toward a level that helps you feel more steady. 

Where do you keep it? 

Emergency funds are usually kept somewhere safe and accessible—not exposed to market volatility. That often means a high-yield savings account (HYSA) or money market fund – options that earn interest or yield while staying readily accessible. Less ideal: checking or standard savings accounts, which often earn minimal interest. If you have cash that’s just going to sit on the sidelines, it should be earning something. The focus here isn’t maximizing returns—it’s reliability. When you need the money, it’s there. 

How do you actually build it? 

This is where things can feel the most challenging, especially if your cash flow is already tight. Rather than trying to fully fund it all at once, consider shrinking the goal. Start with something manageable: a small, consistent transfer. An amount that fits without forcing other things off track. Even if it’s $50/month, that starts the account building. Over time, smaller contributions add up. More importantly, they build the habit of setting money aside. 

If you use it, you haven’t failed 

Here’s a vital point: if you need to use the emergency fund because something unexpected pops up, it does NOT mean you’ve failed. It means the account is doing its job. This is what it’s for. 

Even so, watching the balance go down can feel wrong. There’s something about seeing account balances decrease that triggers anxiety—even when there’s a perfectly rational reason for it. Many retirees experience this same discomfort when they start drawing down retirement accounts. They spent decades watching those balances grow, so the first few withdrawals can feel like they’re doing something wrong—even though funding retirement is exactly why they built those accounts in the first place. 

Emergency funds work the same way. You built it specifically so you could use it when something unexpected happens. But there’s still an emotional pinch when the balance drops, and that’s completely normal. 

A different way to think about it 

It’s easy to think of an emergency fund as just another financial requirement—another box to check, something you’re supposed to have before you can move on to other goals. But in practice, it’s less about checking a box and more about creating flexibility. 

It may give you options when something changes. It may help you stay consistent with longer-term plans. It may reduce pressure to make rushed decisions in difficult moments. A better question than “Do I need an emergency fund?” is “What would having a little bit more breathing room actually change for me?” 

That’s the core of it. 

If you’d like learn more and explore how OpenPlan can help you prepare for the unexpected, reach out to our team. 

Emergency Fund FAQs

Watch the videos below to hear Daniel Browne, CFP®‘s perspective on emergency funds:

What is an emergency fund? 

Do I need an emergency fund?

Why do I need an emergency fund? 

How much do I need for an emergency fund? 

How can I start saving for an emergency fund? 

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.