Creating an Emergency Fund to Help You Weather a Storm Like COVID-19

For years, experts have been saying that everyone – including average citizens – needs to have some type of emergency fund in place to help them get through any “rainy days” that may lie ahead. The advice usually varies depending on the source, but most recommend having an emergency fund equivalent to at least three months of a person’s income ready to go in the event that they need it.

Well, the “rainy days” have come, and most people need it now more than ever.

Nearly overnight, COVID-19 has taken the world by storm and has changed the way we think about almost everything. Yet despite this, one recent study conducted by Bankrate revealed that nearly three in 10 adults in the United States – or about 28% – have no emergency savings to speak of.

It’s forgivable if you were totally unprepared for COVID-19 – the proof that a massive number of people are in a similar situation is on the evening news every single night. But while you can’t change the past, you can absolutely have an impact on the future – meaning that there’s no time like the present to take steps to create an emergency fund that will allow you to be ready for the next emergency, regardless of what shape it happens to take.

Starting an Emergency Fund: Ideas to Start Building Savings

The most important thing to understand about saving for an emergency is that there is no “one size fits all” path to follow. Everyone lives a different lifestyle and everyone’s income levels vary wildly – meaning that you need to make choices within the context of your own situation for the best results moving forward.

All of that is to say that you need to begin by first making a budget, which will allow you to see where you can start saving as much money as possible. Figure out how much you’re spending each month on things like rent or your mortgage, utilities, groceries and other essential expenses. Look for opportunities to reduce some of those (like by switching to a less expensive cell phone data plan) and compare the total you find with your overall income.

Once you know how much money is left over for discretionary purposes, you’ll get a better indication of how much you can realistically save from each paycheck.

Next, you need to figure out the best place to actually put that emergency money you’re saving. One of the best options includes a savings account with your local bank or credit union with both a high interest rate and easy access. Sure, you want to make your money work for you – which is what the high interest rate is for. But if you can’t easily withdrawal that money in the event of an emergency (which, by its nature, is something you can’t predict), it really isn’t doing you any good.

For the absolute best results, you’ll also want to choose an option that allows you to move money into this savings account automatically. Sometimes you may even be able to handle this through your employer. If you already get access to your paycheck via direct deposit, for example, your employer can probably help you break that single deposit up into multiple ones that are going to different locations.

The larger portion of your check can automatically go into your primary checking account so that you can use those funds as normal. But a smaller amount – whichever amount you’ve calculated – can automatically go into a separate account in the event of an emergency. That way, you don’t even really have to think about it, and everything essentially takes care of itself.

If you’re worried about having enough money to actually grow that emergency fund over time, consider finding one-time income opportunities outside of your home. Oftentimes a quick Internet search will reveal opportunities in your area to participate in a focus group, to help a neighbor with some odds and ends around the house, or to take care of someone’s pets while they’re away on vacation (although that one is probably rare these days).

Regardless, remember that creating an emergency fund is unfortunately not a passive enterprise – meaning that it is very much something you have to work at. But if you do, over time, you’ll have the savings you need to weather nearly anything that life happens to throw at you – up to and including a global pandemic like the current COVID-19 situation.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

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