Three Steps for Building an Emergency Fund
Many have experienced unexpected financial hardship this year, from employment changes to unforeseen expenses. The First Presidency has encouraged all of us to “prepare for adversity in life by having a basic supply of food and water and some money in savings” (All Is Safely Gathered In: Family Home Storage [pamphlet, 2007]).
God wants you and your family to have what you need—both temporally and spiritually—and to be prepared for difficulty. Temporal and spiritual preparedness build on each other. Whether you are financially secure or struggling to make ends meet, you can know that the Savior’s grace can help you obtain spiritual and temporal necessities.
Along with paying tithes and offerings, eliminating and avoiding debt, and preparing and living within a budget, saving for the future is a key element of wise financial management. You can take a few simple actions right now to begin saving an emergency fund that will cover living expenses for one month.
- Track expenses for at least four weeks. There are many methods and free tools available to track your expenses. You can search for money-tracking tools online, or you can simply write down your expenses with pen and paper. What’s important is to add up at least four weeks of living expenses—just those things you need, like food, transportation, housing, and health expenses.
- Start saving. Now that you know how much you need for a one-month emergency plan, start to set some money aside every month or each time you are paid. Save as much money as you can, and then add to this fund as often as possible to quickly reach your one-month goal. You can save more money by finding extra work, selling things you can live without, or eliminating unnecessary expenses. If you have debts, consider paying only the minimum amount until you have your full emergency fund.
- Continue to save. Once you have one month’s worth of expenses saved up, congratulate yourself! You’re now better able to protect yourself and your family from hardship. Now you can focus on eliminating debt and increasing your emergency fund to cover three—and then six—months of expenses.
Saving money can feel daunting, especially if you are facing financial difficulty right now, but small efforts add up. As you do your best to build an emergency fund and manage your finances wisely, God will help you. Have faith in the enabling power of Jesus Christ, and take things one day at a time.
Bishop W. Christopher Waddell said: “As we embrace spiritual principles and seek inspiration from the Lord, we will be guided to know the Lord’s will for us, individually and as families, and how best to apply the important principles of temporal preparedness. The most important step of all is to begin” (“There Was Bread,” Ensign or Liahona, Nov. 2020, 44–45).
You can find more information and guidance in Personal Finances for Self-Reliance (manual, 2016).