Two years ago, our emergency fund was $1,100 and a prayer. Then the minivan needed a new transmission, and that $1,100 turned into a credit card balance that took us most of a year to pay off.
That was the moment Dan and I decided to do this for real. Not with a big dramatic plan, just with a boring one: a little bit, every single paycheck, automatically.
I've talked about our monthly budget here before, so I won't repeat the whole spreadsheet. This post is just about the emergency fund: how we set it up, where we're at, and what I'd tell a friend starting from zero.
How much we're aiming for
The usual advice is three to six months of expenses. For us, "expenses" means the bare-bones version: rent ($2,650), groceries, utilities, insurance, gas, daycare and minimum payments. That comes to about $6,200 a month when we strip out the extras.
So our goal is $18,600, three months of bare-bones living. Six months would be nice someday. Three months felt reachable, and reachable matters.
Where we keep it
We opened a high-yield savings account at a separate online bank, not the bank where we do our everyday checking. That was on purpose. If I can see the money every time I open my banking app, I'll find a reason to "borrow" it. When it's a transfer away and takes a day to arrive, I think twice.
A few things we looked for:
- No monthly fees and no minimum balance.
- FDIC insured.
- A competitive interest rate. Rates change, so we check every few months, but it's still far better than the near-zero rate on our checking account.
- Easy transfers back to checking when we actually need the money.
The automatic part
This is the whole secret, honestly. Dan and I both get paid every two weeks. On each payday, an automatic transfer moves money from checking into the emergency fund before we can spend it.
We started at $100 per paycheck each. That's $200 every two weeks from the two of us, about $433 a month. It felt small. It also felt doable, which is why it worked.
Every few months, when something freed up, we bumped it up. When the twins moved out of the infant room at daycare and the rate dropped, we sent the difference straight to savings. When I cut our PG&E bill, same thing.
Our actual progress
Here's what the balance looked like at a few checkpoints. I pulled these straight from my spreadsheet:
| Date | Per-paycheck transfer (combined) | Balance |
|---|---|---|
| Sept 2024 | $200 | $0 (started over) |
| March 2025 | $200 | $2,690 |
| Sept 2025 | $250 | $5,940 |
| March 2026 | $300 | $9,480 |
| Aug 2026 | $350 | $12,870 |
That includes a little bit of interest and two withdrawals: $740 when the fridge died in November and $310 for an urgent care visit plus prescriptions in February. Both times we used it exactly the way it was meant to be used, and both times I cried a little from relief that we weren't reaching for a credit card.
What counts as an emergency
We had to agree on this in advance, or every "want" would start sounding like a "need." Our rule is that it's an emergency if it's unexpected, necessary, and urgent. All three.
- Car repair so Dan can get to work: yes.
- Medical bills: yes.
- Job loss or a big cut in hours: yes.
- Birthday parties, holiday gifts, the annual car registration: no. Those are predictable, so they get their own small savings buckets.
What I'd tell a friend starting from zero
- Start with an amount you won't miss. Even $25 a paycheck. The habit matters more than the number at first.
- Automate it on payday. If you have to remember to do it, you won't.
- Give every raise and freed-up bill a job. Send some of it to savings before lifestyle creep eats it.
- Refill it after you use it. We paused extra spending for a month after the fridge to catch back up.
- Celebrate milestones. When we hit $10,000, we got takeout and ate it on the living room floor after the twins went to bed. Peak romance.
At our current pace, we should hit $18,600 around the middle of next year. It's not fast. But every other Friday, a little more of our worry quietly moves into a separate account, and I sleep better because of it.
