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Build emergency savings

Put money away for those unexpected events

You may be able to meet your needs and expenses each month, but how would you cope with an emergency or unexpected cost? What if your car breaks down, you lose your job, or face an unexpected bill?

Putting money aside for emergency or unexpected costs isn’t easy, and it’s a challenge for people in many countries in the world. If you are one of them then an emergency or unexpected cost can tip you into financial hardship.

Being prepared for the unexpected, rather than dealing with it only when it arises, is key to your financial wellbeing. Estimates vary throughout the world, but experts recommend building up enough savings to cover at least 3 months of essential expenses, in case of emergency.

According to the Federal Reserve’s report on the Economic Well-Being of U.S. Households, a sizeable percentage of Americans struggle to deal with unexpected costs. Faced with an unexpected expense of $400, 27% would borrow or sell something to pay for it, and 12% would not be able to cover the expense at all.

Here are 5 tips for building an emergency savings fund:

  1. Set savings goals. Setting goals helps you to track your progress and measure your success. Plan to build up enough savings to cover at least three months of essential expenses, in case of emergency. Anything else that you want to save for (like a holiday) should be on top of this.
  2. Another thing to consider is to discuss your savings goals with your loved ones. Explain what they are for and why they are important. Sharing a savings goal with those around you can help you to stay on track.
  3. Keep your emergency funds separate from the money you use for everyday spending, or to pay your bills. Research shows that doing this may stop you from spending it1. Setting up a separate savings account can usually be done quickly online.
  4. Try to save regularly and automatically. Rather than try to save what you have left at the end of the month, set up an automated transfer from your regular bank account to a savings account on the day you are paid.
  5. If you can’t save a lot, it can be hard to get motivated to save at all. But saving any amount (however small) is helpful, and can build up a valuable emergency savings fund over time.

1 The Role of Mental Accounting in Household Spending and Investing Decisions, Client Psychology, 2018.


HSBC has created the YourMoneyCounts financial wellness program which is presented by HSBC staff to the community in a classroom setting. Participant workbooks covering Budgeting, Credit, and Identity Theft and a budgeting worksheet are found through the YourMoneyCount link above. This program was created in partnership with the national nonprofit Greenpath Financial Wellness,  and they provide free individualized support focused on your personal situation and financial wellness.