Crooner Perry Como’s final number-one hit in the U.S. was a song called “Catch a Falling Star.” In the song, Como’s velvety smooth voice advises us to put the star we’ve just caught in our pocket and save it for a rainy day. Depending on your line of work, rainy days probably don’t negatively affect your income. However, emergencies definitely can. When an emergency befalls you or your family, money is the last thing you want to worry about. With a well-stocked emergency fund, you won’t have to.

The Importance of Emergency Funds

You can plan your life’s course perfectly and work hard to achieve all the goals you set, but there will inevitably be things beyond your control. You’re also human, so you're going to make mistakes.

We can all plan on having a steady income, and even an increasing income, but life may have other plans for us. Any number of emergencies or significant setbacks might occur. These are situations such as:

• A medical emergency for you or a family member.
• A loss of job.
• A major home expense such as a new furnace or central air conditioning
• Property damage, such as a flood, fire, or a tree branch falling on your house.

This is why it’s crucial to have an emergency fund. Unfortunately, many of us don’t. Only 54% of people in the United States have reserves sufficient to cover three months’ worth of expenses. If you’re part of the 46% without a rainy day fund, don’t panic. First, you have a lot of company. And second, it’s not hard to start saving. We’ll show you.

8 Steps for Building an Emergency Fund

Here are eight steps you can take to save money for a rainy day:

1. Set a Goal

Determine how much you need based on your living expenses. Check your expenses for a three-month period and target that amount to save. Once you reach that target, why not double it to give yourself a healthy six-month cushion?

2. Assess Your Budget

Review your income and expenses and identify how much you can save each month without compromising essential needs. Consider cutting discretionary expenditures, at least while you’re building your emergency fund.

3. Open a Savings Account

It may be best to open a separate account for your emergency fund to avoid mixing it with other savings or spending. You don’t want to access the account often, but it must be accessible in an emergency, so it shouldn’t be money that’s completely locked away for a period.

4. Stay Consistent — Maybe Automate

Stay consistent, even if only $20 or $50 per month, and increase the amount as your financial situation allows. You can also set up automatic transfers to your emergency fund account to ensure consistency and reduce the temptation to spend.

5. Consider Adding Windfalls

Allocate bonuses, tax refunds, or other unexpected income to your emergency fund.

6. Track Progress

Regularly check your account to monitor growth and stay motivated to reach your goal.

7. Don’t Dip Into It / Replenish It

Reserve this fund strictly for genuine emergencies. If you need to use the fund, make it a priority to rebuild it as soon as possible.

8. Reevaluate Periodically

Review your emergency fund annually to ensure it still aligns with your current expenses and financial goals. Adjust the target amount as necessary.

M&T Bank Can Help You Save for a Rainy Day

Whatever life throws at you, M&T can help you reach your financial goals when times are good, and we can help you accumulate a healthy emergency fund for life’s unexpected surprises.