Summary5 min read

Optimal Finance Daily - Episode 3493

“Best Ways to Build an Emergency Fund” by Vicki Cook and Amy Blacklock (Women Who Money)

Host: Diania Merriam
Date: March 17, 2026

Episode Overview

This episode, hosted by Diania Merriam, spotlights the importance of building an emergency fund as a foundational step toward financial stability. Featuring an article from Vicki Cook and Amy Blacklock of Women Who Money, the episode breaks down practical strategies to start, build, and maintain an emergency fund, highlights common obstacles, and explores best practices for storing and growing your safety net. Diania adds her personal insight on why maintaining cash reserves is vital, not just for emergencies but also for seizing life’s unexpected opportunities.

Key Discussion Points & Insights

1. The Importance of an Emergency Fund

“Hope for the best, prepare for the worst.” An emergency fund is both a safety net and a launchpad for building wealth.
Prevents the need to rely on high-interest debt or prematurely withdraw from investments during emergencies (03:46).
Potential consequences of not having a fund: bankruptcy, financial disaster, stress, and uncertainty during income loss.

2. Why Most People Don’t Have Emergency Savings

Stat: “Roughly 3/4 of Americans are living paycheck to paycheck with little to no emergency savings.” (05:05)
Cultural habit of spending any surplus as a reward instead of saving.
Many are unsure how or where to start, or are entrenched in the cycle of low balances and credit usage.

3. Simple Steps to Build Your Emergency Fund

Start Small: “Start with just $25 a month and increase it as you can with time.” (05:50)
- The key is to begin, regardless of amount, and build consistency.
- Creating and reviewing a budget identifies areas to cut expenses and redirect savings.
- Automating deposits ensures discipline and removes the need for continued willpower.
Quote: “The key is consistently saving a set amount on a regular basis.” (06:15)

4. How Much Should You Save?

Short-term goal: $1,000 for immediate emergencies like car repairs or medical deductibles (06:35)
Long-term goal: Six or more months’ worth of living expenses. This offers adequate breathing room if you lose your income.
Adjust emergency fund size based on personal circumstances—singles with few dependents may need less than those supporting families.

5. Where to Store Your Emergency Fund

Savings Account: Low risk, liquid, FDIC insured, slightly interest-bearing (06:54)
Online Banks: Often higher interest rates than traditional banks.
Money Market Account: Slightly more interest, limited transactions per month, usually requires a minimum deposit.
Certificates of Deposit (CDs): Offers a fixed rate with higher returns, but funds are less accessible and early withdrawal penalties apply.
- “This is an account you may want to use for a smaller sum, such as three months’ worth of living expenses.” (07:10)

6. Growing and Protecting Your Fund

Treat it as Untouchable: “You grow an emergency fund by pretending it doesn't exist.” (07:15)
Avoid the temptation to dip into these funds for non-emergencies.
Funnel bonuses, side hustle income, and unexpected windfalls directly into your fund to accelerate growth.
Motivation: Watching the fund grow can become an internal competition and motivation booster.

Memorable Quotes & Notable Moments

On the consequences of credit as an emergency fund:

“Credit cards seem like a solution to an emergency at the time, but in reality they create a vicious cycle of debt dependence.” (04:10)
– Vicki Cook & Amy Blacklock
On building the habit:

“Don’t be discouraged if this is a small amount at first … over time it will transform your finances.” (05:45)
– Vicki Cook & Amy Blacklock
On automation:

“Schedule a date to deposit the savings, or better yet, set up an automatic recurring deposit.” (06:05)
– Vicki Cook & Amy Blacklock

Diania Merriam’s Personal Commentary

[08:52] Diania expands on the concept of the emergency fund as an “Emergency/opportunity fund”:

She shares a personal story of quitting her job in 2021 due to an unexpected situation, a move made less stressful because of her robust cash reserve:

“I was able to do it because I had – and still have – a long cash runway.” (09:15)
She stresses that cash on hand isn't just for obstacles, but also to seize life-changing opportunities.
Disagrees with those who advocate for minimal cash emergency funds in favor of keeping money invested, due to the volatility and difficulty of withdrawing investments during market downturns.
Categorizes her money by “different jobs”: cash for liquidity, investments for growth:

“I don't care that my cash isn’t growing, because that’s not its job.” (09:45)
Key takeaway: As net worth grows, cash as a percentage of that net worth becomes less significant.

Timestamped Highlights

[03:46] – Why emergency funds matter more than relying on credit
[05:05] – Common reasons Americans lack emergency savings
[05:50] – Starting to save: the importance of small, consistent contributions
[06:35] – How much to save initially versus the long-term goal
[06:54] – Storage options for your emergency fund: savings, money market, CDs
[07:15] – How to reinforce and grow your fund (pretend it doesn’t exist)
[08:52] – Diania on using cash reserves for opportunities, not just emergencies

Final Thoughts

Building an emergency fund is not just practical—it’s empowering. Start with what you can, automate savings, keep your fund in an accessible but separate account, and protect it from non-emergency uses. Diania’s commentary encourages listeners to see their cash reserves not just as insulation from crises, but as launchpads for new opportunities and stress-free decision-making.

Action steps from this episode:

Start your monthly emergency fund transfer—even if it’s only $25.
Review your budget for savings opportunities and automate deposits.
Choose the right storage vehicle (savings, money market, or CD) for your situation.
Remember: your emergency fund’s “job” is safety and flexibility—not rapid growth.

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Transcript10 lines

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This is Optimal Finance Daily Best Ways to Build an Emergency Fund By Vicki Cook and Amy Blacklock of womenwho money.com youm've probably heard the mantra hope for the best, prepare for the worst. This is true when it comes to having an emergency fund. As much as we can hope for the best, we're going to face emergencies from time to time. This makes it critical to create an emergency budget and build an emergency fund and be financially prepared for unexpected expenses. Most people rely on credit cards as their emergency fund. Credit cards seem like a solution to an emergency at the time, but in reality they create a vicious cycle of debt dependence. It means you could be making payments with interest on groceries you bought more than a year ago. In order to build and grow an emergency fund, you have to change some financial habits. The rewards of these changes far outweigh any risks. Why is an Emergency Fund Important? Having an emergency fund gives you a safety net and puts you on the right track to financial stability and building wealth. It could potentially save you from bankruptcy or other financial disasters if you suddenly lost your job. This fund is money set aside so life's unexpected events don't have drastic consequences on your finances. It's a much better alternative than taking on more debt or facing penalties for withdrawing too early from long term investment. Why do people not have an Emergency Fund? Roughly 3/4 of Americans are living paycheck to paycheck with little to no emergency savings. That's well over half of us who would face major stress and uncertainty about what to do if we had a true emergency. People have become used to their checking accounts getting low and stretching out those last few days until the next check comes in. When there's extra, it's spent as a reward for hard work instead of being saved in an emergency fund. Maybe they want to change and start saving more but are not sure where to start. How to Build an Emergency Fund first we have to break the paycheck to paycheck cycle and just start saving. Don't be discouraged if this is a small amount at first just starting. No matter the dollar amount is moving in the right direction over time it will transform your finances. Start with just $25 a month and increase it as you can with time. You'll see this start to accumulate and you'll be even more motivated to save at a faster rate. The key is consistently saving a set amount on a regular basis. If you're not sure where to find the $25 each month, create a budget. A budget will tell you where you can cut expenses and save more. Then schedule a date to deposit the savings or better yet, set up an automatic reoccurring deposit. How Much Should I Save in an Emergency Fund? A great long term goal is to have six or more months worth of living expenses saved. This would give you some breathing room and time to figure out a plan if you or your significant other were to lose an income. A great starting place for an emergency fund is $1,000. This would be enough to help with an urgent repair needed for your home or car. It would also help if you had a medical emergency and needed funds for the deductible. The size of your emergency fund will also depend on your personal situation. Someone who's single with a smaller budget and a strong support system may not need as much as someone with multiple dependents in the event of a financial crisis. Where to Build an Emergency Fund the most common place to house an emergency fund is a savings account, creating a liquid asset kept safe in an FDIC insured account. A regular savings account provides low risk and easy access when an emergency happens. It also earns a little interest and is easy to set up with automation. An online bank like CIT typically offers higher interest rates than brick and mortar locations. A money market account is another option, similar to having a combined checking and savings account with a limited amount of transactions each month. These usually require a minimum deposit but offer a little more interest than a regular savings account and a certificate of deposit or CD is a promissory note issued by a bank where you essentially promise to leave the money with the bank for a certain time frame and the bank offers a fixed interest rate in return. The drawback is that you can face penalties for early withdrawal since the money in a CD is not as easily accessible and comes with more terms of service. This is an account you may want to use for a smaller sum, such as three months worth of living expenses. How to Grow an Emergency fund. You grow an emergency fund by pretending it doesn't exist. Truly, you want to try and forget about it. Out of sight, out of mind until a time when you need it. Some people deplete their emergency funds for things that are not truly an emergency, such as taking a leisure trip or buying a new device when the old one is working fine. Instead, you have to resist the temptation to use this money unless there's a true emergency. As your savings begin to grow, it becomes exciting to set new goals. It can turn into a competition with yourself to see how much more you can save. You can grow your emergency fund faster by depositing any extra income, such as a bonus at work or money from a side hustle. You'll sleep better at night. An emergency fund serves as your own personal finance assistant. Having these funds will help you rest better, knowing you're prepared for life's unexpected expenses. Once you have your emergency fund established and make consistently saving a habit, it will grow to the point that eventually you'll want to explore options for investing. Having your own money to handle emergencies is part of being financially healthy. Good financial health leads you on the path to wealth and a secure future. You just listened to the post titled Best Ways to Build an Emergency Fund by Vicky Cook and Amy Blacklock of womenwho money.com when you're ready to start
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Having cash on hand has so many more benefits than just helping you navigate the unexpected things life throws at you. I like to refer to my cash position as my Emergency slash opportunity fund because I recognize that life is throwing me opportunities just as much as it's throwing obstacles at me. And having that cash on hand has allowed me to make pivots painlessly. So, for example, in 2021, I quit my job due to an unanticipated situation with my employer. I didn't plan for it, but it was an opportunity that presented itself and I was able to do it because I had and still have a long cash Runway. I've heard some personal finance bloggers make the case for not having as much cash on hand because it could be working harder for you if you invested it. And if you really come into a situation where you need cash, you could just sell some investments. The reason why I don't do this is because I think it would cause me to watch my investments much more and stress over volatility. It would be unfortunate to have to sell stocks during a downturn just because I didn't have cash on hand. Also, I look at my different piles of money as all having different jobs. My cash has the job of liquidity and easy access, and my investments have the job of growth. I don't care that my cash isn't growing, because that's not its job. And as my overall net worth grows, my cash as a percentage of my net worth gets smaller and smaller over time. So it continues to matter less and less that my cash isn't growing. But I think that does it for today. I hope you're having a great day. Thanks for being here and I'll see you on tomorrow's episode where your optimal life awaits.