4 Reasons People Struggle To Build Up Their Emergency Funds
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
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It’s a new year, which means that it’s another chance to begin taking your financial future seriously. A great way to stay on track is to build a robust emergency fund.
And yet, so many people struggle to do it. A recent GOBankingRates survey found that 49% of Americans have less than one month’s worth of expenses saved (37.4% have no emergency savings, and 11.6% have some but less than one month’s worth).
Being faced with emergencies is not a question of if but when. Crises are a given for everyone. So it’s important to be prepared for when emergencies do occur.
Here are some of the top reasons people struggle to build up their emergency funds and some ways to go about it.
They Have the Wrong Mindset
“The biggest obstacle to emergency fund building isn’t just low income,” said Kevin Shahnazari, founder and CEO of FinlyWealth. “It’s the psychological trap of viewing emergency savings as money that’s ‘locked away’ rather than as financial freedom insurance.”
Shifting this mindset is key here. “At FinlyWealth, I regularly see clients struggle with this mindset shift, but those who make it successfully build their emergency funds three times faster,” he said.
Saving Feels Overwhelming and Isn’t Immediately Rewarding
“Building an emergency fund often feels overwhelming for many people, and in my experience, the reasons typically boil down to three factors: low income, lack of consistent budgeting and impulsive spending habits,” said Shirley Mueller, finance expert and founder of VA Loans Texas.
“When income barely covers necessities, the idea of setting money aside can seem impossible,” she said.
For others, it’s not about what they make but how they spend, according to Mueller.
“I’ve also seen clients struggle because saving for emergencies isn’t immediately rewarding; it’s easy to push it off for ‘later’ while focusing on more tangible goals like vacations or big purchases,” she said.
They Neglect To Save When Tackling Debt
“High-interest debt creates a painful double-bind,” Shahnazari said. “Every dollar in emergency savings feels like a dollar not going toward debt reduction.”
He advises his clients to start with just $25 per week in automated savings while tackling their highest-interest debt.
“Through my platform’s analysis, I’ve found this balanced approach helps users avoid 70% of emergency credit card use,” he explained.
Subscription Creep Inhibits Saving
“Subscription creep is the silent killer of emergency funds,” Shahnazari said.
These small expenses can add up and inhibit saving. “Small, daily expenses, like takeout or subscription services, quietly chip away at the potential to save,” Mueller said.
Shahnazari observed that people tend to underestimate their recurring charges by $150 to $300 monthly.
“In my experience implementing financial technology solutions, I’ve observed that clients who audit and trim their subscriptions typically find enough savings to fully fund their emergency account within 12 months,” he said.
How To Build Emergency Savings
While building emergency savings can be difficult for a variety of reasons, there are steps people can take to grow their emergency funds.
Start Small and Stay Consistent
The key to overcoming these challenges, according to Mueller, is starting small and automating the process.
“I often recommend setting up an automatic transfer to a dedicated savings account every payday, even if it’s as little as $10 or $20,” she said.
The amount doesn’t have to be overwhelming to make a difference, she said. It’s the consistency that matters.
“As you adjust to the habit, increase the amount when possible. For those with irregular income, I suggest using windfalls like bonuses, tax refunds or cash gifts as opportunities to give your emergency fund a quick boost,” she explained.
Watching the balance grow, even slowly, can provide a sense of accomplishment and motivate you to keep going.
Find Room in Your Budget
Another practical tip is identifying areas to cut back, even if just temporarily, according to Mueller.
She recommended reviewing spending and looking for “leaks,” like unused subscriptions, frequent dining out or other nonessential expenses.
“Redirecting that money into your emergency fund can quickly add up,” she said. “For clients with particularly tight budgets, I recommend supplementing income through side gigs or selling unused items.”
She explained that the hardest part is often getting started, but once you see progress, it becomes easier to stay motivated.
“Building an emergency fund isn’t just about having money set aside, it’s about creating peace of mind, knowing you can handle life’s surprises without derailing your financial stability,” she said.
Methodology: GOBankingRates surveyed 1,001 Americans aged 18 and older from across the country between Oct. 17 and Oct. 22, 2024, asking 12 different questions: (1) What is your main financial goal for 2025?; (2) How do you plan on keeping yourself focused on your financial goal in 2025?; (3) If you’re planning to retire in 2025, what is your main financial concern?; (4) How much debt do you have?; (5) How do you plan on paying down your debt in 2025?; (6) How much time do you expect to spend planning your budget per month in 2025?; (7) Currently, what percentage of time do you stick to your budget?; (8) How much do you have in your emergency fund?; (9) How much do you expect to add to your emergency fund in 2025?; (10) How many months of your expenses do you have saved?; (11) What financial resources are you incorporating into your personal finances in 2025?; and (12) What’s your main financial concern going into 2025? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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