The Surprising Way To Get Help Building an Emergency Fund
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Financial advisors typically suggest that people save between three and six months of expenses to prepare for costly, unexpected emergencies. While that sounds doable in theory, more than 20% of Americans have no emergency savings at all, according to Empower.
That’s where a lesser-known benefit may help. Some employers offer a surprising tool to make saving easier: emergency savings accounts (ESAs). These accounts let you automatically save for emergencies through payroll deductions, and in some cases, your employer may even match your contributions.
Getting that automatic payroll savings plus possible matching from your employer makes building an emergency fund much easier.
What Is an Emergency Savings Account (ESA)?
An ESA allows you to save in a dedicated fund for unexpected expenses through automatic payroll deductions. These accounts are funded with after-tax contributions, rely on automation to build savings steadily, and, in some cases, can be taken with you from one job to another.
According to one bank’s research, the average consumer saves about $400 within four months and $1,000 in one year. That’s money that can prevent you from having to rely on credit cards or high-interest loans when the unexpected happens.
Emergency Savings Habits Have a Ripple Effect
Not only does an ESA help you build a cushion for emergencies, but it may also have a positive effect on other savings goals. One recent study found that employees with emergency savings are 70% more likely to contribute to their employer-sponsored retirement plans as well.
That kind of ripple effect can improve both short- and long-term financial stability.
How To Enroll and What To Look For
To find out if you can enroll in an ESA through work, check your employer’s benefits portal or reach out to human resources. Look for “emergency savings account” or “ESA” options. Some employers have enrollment periods, but once you’re eligible, you’ll choose a contribution amount via payroll deduction and confirm the account provider and withdrawal rules.
Key features to review include:
- Contribution cap: Some in-plan ESAs cap savings at $2,500.
- Withdrawal rules: Understand how often you can withdraw and if there are any fees.
- Employer match or bonuses: Take full advantage of any incentives.
- Rollover or portability: Check if funds can move with you when you change jobs.
Most ESAs are limited to a total of around $2,500, but some plans allow you to roll unused funds over into a retirement or regular savings account. It’s smart to use these funds only for true emergencies, so they’re available when you really need them.
Making the Most of an ESA
Once your ESA is set up, automate contributions at a level that won’t strain your budget. Contribute enough to get any available employer match or bonus and if possible, continue to grow a separate emergency fund in a high-yield savings account.
Even small amounts saved consistently can create financial breathing room — and the more you save, the stronger your safety net becomes.
When life throws you a financial surprise, an ESA can turn your employer’s payroll system into your most reliable safety net.
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