Building an emergency fund can feel daunting, but these tips can help

NEW YORK (AP) — Maybe your car broke down, your computer was stolen, or you had a surprise visit to urgent care. Emergencies are inevitable, but you can prepare to deal with them by building an emergency fund.

“There are so many things that happen in our lives that we don’t expect and most of them require financial means to overcome,” said Miklos Ringbauer, a certified public accountant.

The industry standard is to save three to six months of expenses in an emergency fund. However, this can feel daunting if you live paycheck to paycheck or if you have debt. But if you’re in either of these situations, it’s even more crucial to build a financial safety net that can help you in times of crisis.

“Emergency funds allow you to prevent further debt,” said Jaime Eckels, certified financial planner and wealth management leader for Plante Moran Financial Advisors.

Suppose you’re paying multiple credit cards and other loans. In that case, Rachel Lawrence, head of advice and planning for Monarch Money, a financial planning and budgeting app, recommends that you make the minimum payments while you build your emergency fund. Once you’ve hit an amount that feels right for your lifestyle, you can go back and continue tackling your debt more aggressively.

Whether you want to start an emergency fund or create better habits while you save, here are some expert recommendations:

The idea of saving for three to six months’ worth of expenses can be daunting, so it’s best to start with a smaller milestone. Lawrence recommends starting with a goal of saving $1,000, then moving on to save one, three, and six months of expenses.

The way you approach this goal can vary depending on your income and your budget. But starting with small, attainable goals can help you build an emergency fund without feeling financially strained.

“Starting small is okay. Even if it’s $20 right out of your paycheck, those small things can add up,” Eckels said.

She recommends building your emergency fund in a separate account from your regular savings account, ideally a high-yield savings account, which offers a higher interest rate than a traditional savings account.

Knowing how much to save for your emergency fund depends on your life situation. Lawrence suggests you gauge your own financial responsibilities to estimate how much your ideal emergency fund should be.

For single professionals with no significant financial responsibilities, such as a mortgage or a car, the amount might be $2,000 to $3,000. At the same time, people with children and several pets might aim to save for six months’ expenses.

“There's no one-shoe-fits-all solution. Everybody is different, especially if you have variable expenses on a monthly basis,” Ringbauer said.

Lawrence recommends that self-employed people maintain two emergency funds: one to buffer low-income months and another for true emergencies. To build your buffer account, Lawrence recommends setting aside some money during high-earning months.

“You set that amount aside in your buffer account until you have two or three months of the amount that you want, she said. “Because that way any month where you have less money, you go pull from the buffer and it’s no big deal.”

Eckels recommends setting up automatic savings as a low-effort way to build your emergency fund.

Scheduling your savings to be withdrawn from your bank account as soon as your paycheck arrives is an effective way to build a savings habit without having to transfer the money manually.

“I always tell people if it was never in your bank account, you never had it, right?” Eckels added.

She also recommends that her clients open a separate account, one that isn’t at the same bank as their checking account, so they aren’t tempted to transfer the money in a non-emergency.

As you’re making progress towards your emergency fund goal, making it visual can help you stay motivated, according to Lawrence.

She recommends getting creative with how you track your progress, ideally with a method that brings you joy.

“You want your brain to get rewarded as often as possible when you’re seeing a bunch of progress,” she said.

Some options to make your progress visual include drawing a thermometer-like tracker and keeping it updated as you advance toward your goal, documenting your progress on a habit-building tracker on your phone, or using a budgeting app with a tracking tool.

If your budget is really tight and you don’t have much wiggle room to set aside money for an emergency fund, Lawrence recommends saving windfalls.

“Unexpected chunks of money that maybe you weren’t expecting, like tax refunds or getting a third paycheck when you normally get paid twice a month, or a bonus, those are your best ways to make progress when you’re tight otherwise,” said Lawrence.

In general, Lawrence recommends that people keep 10% of their windfall for themselves and the rest for their emergency fund. With that breakdown, you can both save and feel rewarded by the unexpected income.

Chances are that an emergency will happen, and when it does, you don’t need to feel guilty for using your emergency fund, Lawrence said. Instead, it’s best to think about how you’ve achieved your goal of building a financial safety net for yourself.

“You wouldn’t feel bad about using your down payment to buy a house, you wouldn’t feel bad about saving for retirement, actually to retire,” Lawrence said.

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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

FILE - Medical bills are seen in Temple Hills, Md., on June 26, 2023. (AP Photo/Jacquelyn Martin, File)

FILE -Customers of American International Assurance (AIA), a wholly owned subsidiary of American Insurance Group (AIG) stand in line outside the AIA office as they wait to speak to customer service officers, and some others seeking advice on terminating their insurance policies on Tuesday Sept. 16, 2008 in Singapore amid fears that that American Insurance Group, the world's largest insurer, was fighting for its survival after downgrades from major credit rating firms, adding pressure as AIG seeks billions of dollars to strengthen its balance sheet.(AP Photo/Wong Maye-E, File)

ATLANTA (AP) — A federal judge has dismissed a civil rights lawsuit filed by the parents of an environmental activist who was shot dead by Georgia state troopers, saying their actions were “objectively reasonable” when they shot pepper balls into the activist's tent and ultimately fired fatal gunshots after the 26-year-old shot one of the troopers.

The Jan. 18, 2023, shooting of Manuel Paez Terán, known as “Tortuguita,” was a galvanizing moment for the movement to halt the construction of what critics labeled “Cop City,” a sprawling police and firefighter training center that opened last year on the site of a forest and former prison farm just outside Atlanta.

Paez Terán’s family later sued three law enforcement officers who they say planned and carried out the raid against protesters who had spent months camping in the woods near the DeKalb County construction site. The lawsuit said troopers violated Paez Terán's free speech rights and used excessive force against the activist, who then panicked and began firing shots. An autopsy commissioned by the family concluded that Paez Terán, who used they/them pronouns, was sitting cross-legged with their hands in the air when they were shot more than a dozen times.

In a ruling Monday, U.S. District Judge Steven Grimberg noted that, as the plaintiffs have acknowledged, Paez Terán fired at the troopers, wounding one of them, which the judge said makes the troopers' lethal response reasonable. Grimberg also said that prior to the shooting, troopers were within their rights to fire pepper balls at Paez Terán after the activist, who was accused of criminal trespass, did not comply with orders to leave the tent.

“Because Paez Teran initiated gunfire with the (Georgia State Patrol) officers, Plaintiffs cannot maintain that Defendants’ actions were the proximate cause of the use of deadly force that ultimately ended the decedent’s life,” the judge wrote.

Grimberg also ruled that the officers had qualified immunity, special legal protection that prevents people from suing over claims that police or government workers violated their constitutional rights.

Paez Terán’s parents, Belkis Terán and Joel Paez, are “devastated” by the judge's ruling, according to their attorneys, Jeff Filipovits and Wingo Smith.

“They feel they are being denied the accountability they deserve,” the attorneys said in a statement. “The records of their child’s death still have not been publicly released. They will be reviewing all their legal options.”

Body camera footage from four Atlanta officers involved does not show the shooting itself, the Georgia Bureau of Investigation has said. But the agency said footage shows the officers encountered Paez Terán in a tent in the woods and fired in self-defense after the activist shot at troopers and ignored verbal commands to leave the tent.

A prosecutor declined to charge the troopers who killed Paez Terán, saying their use of deadly force was “objectively reasonable.” Investigators have also said ballistics evidence shows the injured trooper was shot with a bullet from a gun Paez Terán legally purchased in 2020.

Activists formed the “Stop Cop City” movement to protest the construction of an 85-acre (34-hectare) Atlanta Public Safety Training Center, which they said would cause environmental damage by cutting down huge swathes of trees and exacerbate flooding fears in a poor, majority-Black neighborhood. They also opposed the use of tens of millions in public funding on what critics described as a training ground for “urban warfare.”

Protests against the facility at times veered into violence, with some masked activists torching police cars and construction equipment — actions that ultimately led to a sprawling racketeering indictment against 61 protesters in 2023. A Fulton County judge tossed the landmark case on procedural grounds last year, but Republican Attorney General Chris Carr is appealing the ruling.

Though the movement has receded since the filing of the racketeering charges and the opening of the training center, the name Tortuguita is still invoked at anti-police protests, and the activist's image has become a common sight in murals and flyers across Atlanta.

FILE - Belkis Terán, left, Daniel Paez, center, and Pedro Terán, family members of Manuel Esteban Paez Terán, known as “Tortuguita,” in poster at right, embrace during a news conference, Monday, March 13, 2023, in Decatur, Ga. (AP Photo/Alex Slitz, File)