Start an emergency fund

An emergency fund is money set aside for surprises such as a car repair, a medical bill or a gap in income. It stops one bad week from turning into debt.

How much to aim for

Start with a small goal, such as one week of essential costs. Later, work toward three to six months of essentials like rent, food, utilities and transport.

How to build it

• Open a separate savings account so the money is not mixed with everyday spending.
• Automate a small transfer on payday so you never have to remember.
• Add windfalls, such as a tax refund or a bonus, when you get them.
• Pause the habit only when you truly need the money, then restart.

What counts as an emergency

A sudden, necessary expense you could not plan for. A sale or a holiday is not an emergency, and keeping that line clear protects the fund.