Financial Literacy: Saving and Emergency Funds

An emergency fund is a separate savings account designated for unexpected expenses. It's generally recommended that students aim to save between three to six months' worth of living expenses​.

Image Source: iStock

Here are some steps to start building your emergency fund:

• Open a Separate Account: Consider opening a dedicated savings account to avoid dipping into your emergency fund for non-emergencies​.
• Start Small: Even saving a small amount regularly can add up. For example, if you save $10 a week, you could have $520 in a year​.
• Use Windfalls Wisely: Whenever you receive extra money—like a gift or a financial aid refund—consider putting a portion into your emergency fund​.
• Make it Automatic: If you have a part-time job, set up automatic transfers from your checking account to your savings to ensure you're consistently contributing to your fund​.

To ensure you can consistently save, consider the following strategies:

• Create a Budget: Track your income and expenses to identify areas where you can cut back and allocate funds toward savings.
• Prioritize Savings: Treat your savings as a non-negotiable expense. After covering your essentials, prioritize putting money into savings before spending on discretionary items​.
• Set Clear Goals: Define what you’re saving for—whether it’s a specific emergency fund target or other financial goals—which can help motivate you to stick to your saving plan​.

By establishing an emergency fund and implementing consistent saving strategies, you can better manage financial uncertainty and prepare for future financial challenges. For more information, you can check out resources from CollegeData and Ramsey Solutions that delve deeper into these topics.

Budget Example for Saving and Emergency Fund:

Sample Monthly Budget (Monthly Income: $500)

• Fixed Expenses: Phone Bill ($50), Subscriptions (Spotify, Netflix) ($20)
• Variable Expenses: Groceries ($100), Dining Out ($40), Entertainment ($30)
• Savings/Investments: Checking Account ($50), Investments/Long-Term Savings ($50)

In this example, the budget allocates $50 per month to the emergency fund, which is a great start. Even though it's a small amount, this consistency can add up over time.

Example of Financial Goals for Saving and Emergency Funds:

• Short-Term Goal: Save $500 for an emergency fund within the next 6 months.
  • Break it down: Save $100 each month from your part-time job.
• Medium-Term Goal: Build a three-month living expense buffer for emergencies (e.g., $1,500) by the end of the school year.
  • Allocate $200 each month toward the emergency fund to meet this goal.
• Long-Term Goal: Save for post-graduation expenses, like moving costs, new job clothing, or travel.
  • Set aside $50 per month for this purpose, gradually increasing the amount after reaching the emergency fund goal.

By creating a structured budget and clearly defined financial goals, you can stay on track and work steadily toward building your emergency fund and other savings.

Developing strong saving habits takes time, reflection, and the right tools. Whether you're just starting out or trying to improve your current financial habits, these worksheets and quizzes can help you take practical steps toward a more secure financial future.

Savings Basics Worksheet
This worksheet walks you through the process of creating a simple savings plan. You'll identify your income, expenses, and potential areas where you can cut back. It also includes prompts to help you recognize small spending leaks—like frequent coffee purchases or impulse buys—that add up over time.

- Check out the the Savings Basics Worksheet (PDF)

Overspending Quiz
Not sure if your spending habits are getting in the way of your goals? This short quiz helps you identify if you’re an overspender. By answering a few questions about your daily habits, you’ll get insight into where your money might be going—and how to take control of it.

- Take the Overspending Quiz

Financial Jargon IQ Worksheet
Understanding money starts with understanding the language of finance. This worksheet challenges you to match financial terms with their definitions—perfect for building confidence when reviewing contracts, budgeting, or planning your future.

- Try the Financial Jargon IQ Worksheet

Savings Goal Calculator
Have a savings target in mind—like an emergency fund or travel fund—but not sure how much to set aside each month? This interactive calculator helps you determine how much you need to save and how long it will take to reach your goal.

- Use the Investor.gov Savings Goal Calculator

These interactive tools are a great starting point for reflecting on your financial behavior and identifying realistic actions you can take to improve your saving strategies. Consider revisiting them at the beginning of each semester to track your progress and refresh your financial mindset.