Running a business comes with uncertainty. One month everything is going according to plan, and the next you’re facing an unexpected expense, a slow sales cycle, or a personal emergency that affects your income. That’s why having an emergency fund isn’t just good financial advice. It’s an important part of protecting both your personal finances and your business.
Recent research from the American Institute of CPAs (AICPA) found that while 78% of Americans have at least some money set aside for emergencies, many still don’t have enough savings to weather a significant financial setback. Even more concerning, 22% report having no emergency savings at all.
If you’re a business owner, this is a reminder that building financial reserves should remain one of your top priorities.
Many People Have Savings, But Not Enough
Having some savings is certainly better than having none, but the amount matters.
According to the AICPA survey:
- 20% have less than three months of living expenses saved.
- 24% have between three and six months saved.
- 10% have seven to nine months saved.
- 6% have ten to eleven months saved.
- Only 18% have a full year or more of living expenses set aside.
Financial professionals often recommend maintaining at least six to eight months of living expenses in an emergency fund. That cushion can help cover unexpected expenses without relying on credit cards or loans.
Whether it’s a major home repair, medical expense, temporary business slowdown, or another unexpected event, having cash available gives you options instead of adding financial stress.
Some Groups Are More Financially Vulnerable
The survey also highlighted that emergency savings are not evenly distributed.
Among those surveyed:
- 22% have no emergency savings at all.
- 25% of women reported having no emergency fund, compared to 17% of men.
- Adults between the ages of 45 and 54 were the most likely to have no savings, with 30% reporting they had nothing set aside.
While everyone’s financial situation is different, these numbers show how easy it can be to postpone saving while juggling everyday expenses and responsibilities.
Rising Costs Make Saving More Difficult
Many households continue to feel pressure from higher living costs.
The survey found:
- One third of Americans say groceries are their largest monthly expense after housing.
- Nearly six out of ten people who postponed a major purchase or financial decision said rising costs were the primary reason.
- Almost half delayed important decisions because they simply didn’t have enough savings.
When your budget is already stretched, saving can feel impossible. However, even small, consistent contributions can make a meaningful difference over time.
An emergency fund isn’t built overnight. It’s built one deposit at a time.
Four Practical Ways to Build Your Emergency Savings
If building savings feels overwhelming, start with simple habits that become part of your routine.
Automate Your Savings
One of the easiest ways to save consistently is to remove the decision from the process.
Set up an automatic transfer from your checking account into your savings account each payday. Even modest amounts add up over time when they’re consistent.
Give Your Savings a Purpose
Saving becomes easier when you know exactly what you’re working toward.
Whether your goal is creating an emergency fund, preparing for a future purchase, or simply creating more financial security, having a clear purpose helps keep you motivated.
Celebrate small milestones as your balance grows.
Review Your Spending
You don’t necessarily need to make dramatic lifestyle changes.
Take a fresh look at your monthly expenses and identify a few areas where small adjustments could free up additional money for savings.
Redirecting even one or two recurring expenses each month can steadily build your emergency fund.
Choose the Right Place for Your Savings
Emergency funds should remain accessible while still earning interest.
High yield savings accounts often provide a good balance between accessibility and growth, allowing your money to earn more while remaining available when you need it most.
Peace of Mind Is One of the Best Investments You Can Make
As a business owner, you already know that unexpected challenges are part of entrepreneurship. Having an emergency fund won’t prevent those challenges from happening, but it can make them much easier to manage.
Financial security isn’t about having unlimited resources. It’s about creating enough flexibility to make thoughtful decisions instead of reacting out of financial pressure.
Building an emergency fund is one of the most practical steps you can take to protect yourself, your family, and your business.
If you’re unsure how much you should be setting aside or want to better understand your cash flow, Affordable Bookkeeping & Payroll Services can help. My team and I work with business owners to improve their financial systems, understand their numbers, and make informed decisions that support long-term success.
We can be reached at 310-534-5577 or contact@abandp.com.
