Emergency Funds: why do you need them?

If you’re like me, you’ve probably heard the term “emergency fund” thrown around by adults or finance YouTubers. At first, I thought it was something only parents or people with mortgages needed. But now I realize it’s actually something every teen or young adult should start building—even if it’s just a little bit at a time.

Let me explain.

An emergency fund is basically money you set aside just for unexpected stuff, like a safety net. It’s not for concert tickets or buying new shoes. It’s for real emergencies: like if your car breaks down, your laptop dies the week before finals, or you lose your part-time job and still have bills to pay. These things happen. Expect it. And if you don’t have any savings, they can turn into way bigger problems. Did you know less than 50% of Americans have enough money in their emergency fund to last them more than 3 months?

I had a friend last year who saved up for months to buy a gaming PC. He spent almost everything he had, and then two weeks later, his phone completely died. He didn’t have enough to get a new one, and since he used it for school and work, it made life way harder. If he had even $100 set aside for stuff like that, it would’ve saved him a ton of stress. Though on a smaller scale, the concept stands.

So how do you even start an emergency fund when you’re young and probably not making a lot of money? Here’s what I did and what you can try too:

1. Set a small goal. You don’t need $1,000 overnight. Start with $50. Then work your way to $100, $250, and so on. Even $20 can be helpful in the short term.

2. Save part of what you earn. If you babysit, work part-time, or even get birthday or holiday money, put 10–20% into your emergency fund. I started by saving $5 every time I got paid. It didn’t feel like a lot, but it added up quicker than I expected.

3. Use a separate account or envelope. Keeping it out of your main account or wallet helps you avoid spending it on snacks or random stuff. I use a free savings account online, and I named it “Emergency Only” so I remember not to touch it unless I really need to. My personal favorite place to put emergency funds are high-yield savings account. Not only do you get quick access to the money but it even compounds when you don't need it!

4. Make it a habit. Think of saving like brushing your teeth: though seemingly useless, it is absolutely necessary. The more you do it, the more normal it feels.

   
   

Having an emergency fund isn’t just about money. It gives you peace of mind. Knowing you have even a small cushion in case something goes wrong will make you feel more independent and less stressed. And honestly, life is already stressful enough. If you haven’t started one yet, do it. Even if it’s just a couple bucks this week, any contribution is worth contributing. Future you will be seriously thankful.