6 reasons why you don’t have an emergency fund

Experts say that you should have an emergency fund of three to six months just in case something were to come up.

Emergency funds could help cover:

  • Unexpected home repairs
  • Car troubles
  • Abrupt career changes
  • Sudden medical needs


When you have money saved up for any of the above, you save yourself the headache of getting into a deep debt cycle. 

However, many don’t have this kind of fund saved up. The median emergency fund balance among workers is only $5,000, and only one in four Americans have no retirement savings either.

They don’t typically have an emergency fund because they’re focused on paying bills today rather than saving for the future… 

So, why would someone not have an emergency fund?


6 reasons…

You’re paying off debt now

If you already have debt (credit cards, loans, etc.), it’s hard to take extra money and put it to the side for an emergency…especially when it feels like you’re already in an emergency just trying to pay off the debt you currently hold. This makes it hard to save now, understandably.

It is easier to pay extra money on current debt when you have a cushion for unexpected expenses.


You only have one income

Many households, especially with kids or due to the pandemic, struggled with living off of one income for an extended period of time. If this is the case, most money coming in is rationed out for basic necessities first before many think to add any cash to their emergency savings fund. 


You live paycheck-to-paycheck

Cash is tight when you live paycheck-to-paycheck. You don’t always know if you’ll have enough for rent, for basic necessities, for gas for your car, etc. While you may have a budget to keep track of these estimates, putting aside extra money into an emergency savings fund is likely not top of your priority list.

At the end of 2021, 61% of American workers were living paycheck-to-paycheck. About 42% without an emergency fund were earning 6-figures… 


Haven’t saved for retirement

Retirement savings, while for many seems like a non-negotiable, can also bring about a lot of money stress. A good portion of American workers aren’t saving for retirement at all because they don’t have the funds to do so. If they can’t put aside for retirement, even when employers are matching a percentage of contributions, why would they set money aside for an emergency fund which doesn’t usually include any kind of matching?


You have student loans

This is just another form of debt that you may carry, but student loans are not cheap and can take years to pay back. It can feel challenging to try and save elsewhere when you have this looming repayment plan over your head…

About 46 million Americans have student loan debt.


You’re saving for something else…

Maybe you’re saving for a home or a new car. Maybe you’re saving for a trip with family or friends. Whatever you’re saving for, if cash is being put towards something coming up, that usually means that something else is being negated, i.e. your emergency fund. 


What can I do about this?

Do any of these sound familiar? Do you currently have debt of some kind? Are you saving for something specific?

Take a look at your savings, do you have an emergency fund to pay for 3-6 months worth of your expenses? 

If you need help figuring out how much money that is each month, take a look at our blog on budgeting


To learn more about TrueConnect’s Financial Wellness Platform, with access to financial advisors, emergency savings plans and loan options, click here.

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