Chapter 5: Saving Money
Two-thirds of Americans cannot comfortably afford an unexpected $400 expense. While they might scrape the money together, the stress it causes — and the financial damage it can create — is very real.
The problem is, life doesn’t warn you before sending an unexpected bill. It might be your car needing a costly repair, a dental procedure only partially covered by insurance, or an urgent plumbing issue in your home. These expenses don’t just throw off your monthly budget — they can push you into debt if you’re not prepared.
That’s why building an Emergency Fund is one of the most important first steps toward financial stability. Without one, even a small surprise can undo months of progress. Amanda and Siobhan both learned this the hard way — years of living without a safety net meant every curveball came with anxiety and sleepless nights.
Siobhan’s Big Life Transition
"Two years ago I left my corporate job. I was burnt out and needed a reset — time to focus on my health and rethink my career. I wanted to step back into part-time teaching as a College Professor, knowing the income wouldn’t cover my full expenses. Thankfully, I’d built an Emergency Fund of just over $25,000. That fund became my safety net. I could pay my bills, buy groceries, and keep my life on track without going into debt. One year later, I returned to full-time work and started replenishing the fund so it would be there for the next unexpected moment. Without it, that year would have been a constant source of financial stress."
What is an Emergency Fund?
An Emergency Fund is a dedicated pool of money set aside exclusively for unplanned expenses and true emergencies. Think of it as your personal safety net — there to catch you before you fall into debt. If you don’t have one yet, it should be your #1 financial priority once you’ve built a basic budget. In fact, it’s more important than paying extra toward your debt. Why? Because without a cash cushion, a single emergency can force you to use high-interest credit cards or loans, putting you further behind.
Where to Keep Your Emergency Fund
The best place for your Emergency Fund is a separate savings account — one that’s easily accessible but not so easy to dip into for non-emergencies. A high-interest savings account is ideal, so your money grows a little while it’s sitting there. (We’ll cover our favourite account types in Lesson 3.)
When to Use It — and When to Leave It Alone
Appropriate reasons to use your Emergency Fund:
Your car breaks down and you need it for work or essential transportation.
You lose your job and need to cover rent or mortgage while job hunting.
You have an unexpected medical or dental expense not fully covered by insurance.
You’re stranded while travelling and need to pay for a last-minute flight home.
Things that are NOT emergencies:
A new pair of boots that matches your coat.
A spontaneous vacation because flights are on sale.
Concert tickets you forgot to budget for.
If you find yourself tempted to dip into your emergency savings for non-essentials, remember: this fund is for protecting your financial future, not financing your wish list.
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