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How to Build an Emergency Fund for Your Military Family


Bad things in life happen when we least expect them, such as your car's transmission breaking. Or maybe you tell your child to "break a leg" figuratively, and they do it literally. Perhaps there's a distant funeral to attend, and you suddenly need to buy plane tickets. Emergencies are a part of life, but far from ideal when they break your budget. A sound financial plan should include an emergency fund, which provides readily accessible cash to pay for immediate, urgent requirements.

What Is an Emergency Fund?

An emergency is difficult enough to deal with, you don’t also want to create financial hardship for yourself as well. An emergency fund is a savings category dedicated exclusively to urgent, unplanned expenses. With an adequate emergency fund, You have money available for disasters or other adverse events without using credit cards or loans. Budgeting and financial planning brings peace of mind for your family, so you can meet emergencies without destroying your budget or retirement savings.

Is Your Military Family Financially Prepared for an Emergency?

According to Military Family Advisory Network (MFAN), 27.4% of currently serving military family respondents have less than $500 in emergency savings or no emergency fund at all. Even more frightening, 49.2% of Veteran family respondents have less than $500 in emergency savings or no emergency fund, while nearly a quarter of families had no practical plan for seeking assistance in a financial emergency. Here’s what MFAN says that looks like:

How Much Money Should Be Kept in an Emergency Fund?

Most financial advisors recommend an emergency fund that would cover two to six months of non-discretionary living expenses. Two months is usually sufficient for a military family with a good credit history. However, if you have weak credit, a poor health history, or a complicated financial situation, six months' worth of expenses is more prudent to keep on hand.

For example, a military family with $2,000 per month in living expenses should save between $4,000 and $12,000 in an emergency fund. The following breakdown is a representative example of these expenses:

















2 Mo. Savings (x2)


6 Mo. Savings (x6)


Where Should I Keep My Emergency Fund?

You want to have quick access to your money in the event of an emergency. Thus, saving emergency funds in a liquid account is a good idea. This makes bank and credit union savings accounts ideal for emergency funds. Some financial institutions also offer high-yield savings accounts, certificates of deposit, and money market funds that may earn more interest. 

These accounts are suitable for an emergency fund if the institution places no restrictions on how quickly you can access the cash. Ideally, your emergency fund account would also have check-writing privileges.

I Don’t Have an Emergency Fund. Where Should I Start?

An emergency fund is a foundational part of a sound financial plan. Once you have a budget, start saving towards two months of living expenses. Using our example above, this equals $4,000. By saving $200 per month, you will reach this next goal in 15 months. By consistently saving small amounts toward your emergency fund, you can reach the minimum recommended emergency fund in less than two years while placing yourself in a more secure financial situation.

AAFMAA can help with financial readiness and information. Articles and educational webinars are available on our Learning Hub and social media accounts, such as LinkedIn and Facebook. If you have questions, please contact AAFMAA Member Benefits 1-800-522-5221 option 2, then option 2 again or [email protected].

This article was originally published June 2, 2020.

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