8. How to Build an Emergency Fund (Without Feeling Miserable)
Why Most People Don’t Start
If you lost your income tomorrow, how long could you stay calm?
For nearly 1 in 4 people, the answer is “not even a day.”
According to the Consumer Financial Protection Bureau (CFPB), 24% of Americans have no emergency savings at all and 39% have less than a month’s worth. But what stops us from building that buffer isn’t always money. It’s often mindset, method, and motivation.
This week, I’ll show you how to build your emergency fund without guilt, pressure, or punishment. Just steady, manageable steps that give you breathing room.
Emergency Funds Are About Options
Most people try to save reactively. They wait for a scare, or some financial emergency, to push them into action. Then they overcommit, burn out, and quit.
But research shows that even modest savings of $250 to $500 can sharply reduce financial stress and the risk of hardship (CFPB, 2022, p. 4). You don’t need six months saved, but you do need to start somewhere.
Behavioural economics also shows that how we frame decisions matters. In one study, Keller et al. (2011) found that when people were asked to make an enhanced active choice, where the consequences of not acting were clearly stated, they were more likely to follow through.
So instead of thinking, “I should save,” reframe it as:
“If I don’t save $10 this week, I’m leaving myself exposed to a $500 emergency I can’t cover.”
That shift from guilt to consequence makes action feel urgent but doable.
Why Saving Feels Hard
Here’s what gets in the way and how to overcome it:
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Big, vague goals:
“Save $10,000” feels impossible.
→ Start with $100. Then $250. Then $500. Every step counts. -
Guilt-based saving:
Deprivation kills momentum.
→ Call it your “Freedom Fund.” You’re not giving up fun, you’re buying peace. -
No automation:
Willpower fades. Systems don’t.
→ Auto-transfer $10 to $25/week to a separate account. Out of sight = growing quietly. -
Low emotional buy-in:
Abstract goals don’t work.
→ Visualize a moment when you needed money fast and didn’t have it. Then start. -
No clear consequence:
Try this Enhanced Active Choice prompt:“Do I want to build stability or risk missing rent because of a flat tyre?”
Start Here
Start this week with five small wins:
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Open a separate savings account (high-interest if possible).
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Name it: “Freedom Fund,” “Peace Account,” or something meaningful.
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Automate $10 to $25 weekly savings. Don’t rely on memory or willpower.
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Track your progress toward $500. Use a simple chart or app.
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Revisit your why. You’re not saving for someday. You’re protecting your today.
If you need support managing your savings and improving your personal financial systems, consider working with a professional accounting team. At Aurora Financials, we help individuals and businesses across New Zealand gain control through tailored accounting and audit services -remotely, reliably, and without the jargon.
Final Thought: The Power of a Small Cushion
Emergency funds aren’t about fear. They’re about not needing to panic when life does what it always does: surprise us.
Start small. Start now. Let peace grow.
That's all for this week.
See you next Friday.
- Jonathan M.
References
Consumer Financial Protection Bureau. (2022). Emergency Savings and Financial Security: Insights from the Making Ends Meet Survey and Consumer Credit Panel. Retrieved from:
https://files.consumerfinance.gov/f/documents/cfpb_mem_emergency-savings-financial-security_report_2022-3.pdf
Keller, P. A., Harlam, B., Loewenstein, G., & Volpp, K. G. (2011). Enhanced active choice: A new method to motivate behavior change. Journal of Consumer Psychology, 21(4), 376–383. Retrieved from:
https://www.cmu.edu/dietrich/sds/docs/loewenstein/EnhancedActiveChoice.pdf
Disclaimer: This newsletter is general information only and is not financial advice. Always do your own research and consult a professional about your circumstances.
