Buzz
If you're like most people in the U.S., you probably don't have much saved or invested. The idea of saving a specific percentage of your paycheck or having your entire yearly salary saved by age 30 can feel overwhelming. It’s easy to become paralyzed by such big numbers and never actually begin.
But as Amrita Jayakumar writes for NerdWallet, even a small savings can prevent serious financial hardship for your family. Jayakumar references this 2016 study by the Urban Institute, a well-known economic and social policy think tank, which found that:
Families with just a modest amount of nonretirement savings are less likely to face eviction, miss utility payments, or rely on public assistance when their income is disrupted. Even small savings ($250–$749) provide a cushion, while higher savings amounts significantly reduce hardship and reliance on benefits. These findings hold true across different family income levels.
I've previously discussed the importance of starting small. Building financial health, like any habit, takes time. Aiming for a smaller target—such as $250 to $750 in your emergency fund (or enough to cover your health insurance deductible)—can inspire you to do more. By breaking a big goal into smaller steps, you can use the snowball effect: each small win motivates you to keep moving forward.
Once you've reached that $250, you can continue building. As Jayakumar suggests, the next milestone is to save enough for one month's worth of essential expenses, like housing, transportation, food, and insurance.
As you continue this process, you'll strengthen your financial habits and be ready to save for other expenses or tackle new goals. “No matter your income, creating your emergency fund doesn’t have to be overwhelming,” writes Jayakumar. Start small and build from there.
