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How to Build an Emergency Fund for Your Military Family


Bad things 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?

The stress that comes along with emergency situations is difficult enough to handle, you don’t also want to create financial hardship for yourself as you deal with them. An emergency fund is a savings category dedicated exclusively to urgent, unplanned expenses. With an adequate emergency fund, you have money available for emergencies 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 each emergency as it occurs without destroying your budget or 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.

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 essential 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, so you should save emergency funds in a very liquid account — ideally with check-writing privileges in case you cannot pull out the cash in the moment you need it. 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 may be suitable for an emergency fund if the institution places no restrictions or penalties on how quickly you can access the cash.

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

First, don’t be intimidated by the need to set a goal. Every little bit you save will help. An emergency fund is a foundational part of a sound financial plan. Once you know your budget, start saving towards two months of living expenses. Using our example above, saving $200 of your discretionary income per month for 15 months would get you to the goal of $4,000. By consistently saving small amounts toward your emergency fund, you can reach the minimum recommended emergency fund — giving you and your family a more secure financial foundation.

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 800-522-5221, option 2, then option 2 again or [email protected].

This article was originally published June 2, 2020.

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