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Two-thirds of Americans can’t cover an unexpected $400 expense. Read on to find out how to start growing your emergency fund and learn the perks of having one. 

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More than a decade ago, I was looking to make a career change from the office jobs I had held for years to writing full time. I had spent years freelance writing as a side hustle but could never figure out a way to make the transition to doing it as my regular job.

After a year of applying to as many jobs as possible, I finally came across one that had the potential to give me steady writing work. Spoiler alert: I got the job, which is why you’re reading this article right now. The only problem was I needed to temporarily move to a more expensive city for several months of training.

That’s when I learned firsthand how powerful an emergency fund can be.

Funding my dream job with savings

My wife and I had a little money saved up at the time, but not a lot. When I got the news that I had been accepted to the program, I immediately began searching for apartments in Alexandria, Virginia — which is not exactly a cheap area of the country.

At the time, the apartments in the city were more than two times more expensive than the monthly mortgage payment for my home in South Carolina. I rented out my house for the few months we were gone, but it didn’t cover the entire mortgage payment. And with the added expense of a short-term lease in Alexandria, I had to tap into my savings account to pay for the expensive apartment.

Adding to the stress of the move was the fact that my wife and I had a young toddler to take care of, and my wife was pregnant with our second son. I remember questioning whether I was making the right decision, but one thing that helped ease my fears was that we had enough money saved up to cover rent for a few months.

I was getting paid for the training time, but the quick rise in cost of living meant that tapping into our savings was necessary. Without money in the savings account, I don’t know how we would have been able to say “yes” to the career change.

How to build up your emergency savings

There are many ways an emergency fund can benefit your personal finances, far beyond helping to fund a career change. Putting money aside for house or car repairs, medical emergencies, or a job loss are common uses for emergency savings.

Most experts recommend putting enough money aside to fund three to six months’ worth of your expenses. For example, if you spend $4,000 every month, an ideal amount to have saved up is $12,000 in your emergency savings.

But research from financial expert Suze Orman’s startup SecureSave found that two-thirds of Americans couldn’t cover an unexpected $400 expense. If you fall into this category, don’t worry about having months’ worth of expenses covered. Start by trying to reach that $400 goal first. Once you find a few ways to save that amount, then push your savings goal to $1,000.

To help achieve this, it may be a good idea to set up automatic deposits into your savings account. Automating parts of your personal finances is an easy way to make good financial habits a routine. You can always start out with a small amount to save each money — even $20 will help — and then increase the amount later.

If you’re having trouble finding an extra $20 per month to add to your savings, consider downloading a budgeting app to track your spending. You may be able to find a few expenses to cut out that you previously may have overlooked.

If you’re starting with nothing in your savings, don’t be discouraged. Any amount, no matter how small, that you can set aside on a regular basis will come in handy when an unexpected expense pops up. And by automating your savings, you can quickly start building your emergency fund without having to think about it.

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