Financial risk is a significant factor in both the personal and professional lives of modern Americans — which is why the need for an emergency fund comes up often.

Of course, having extra money sitting in your bank account might sound like a good idea in theory, but it’s often difficult to motivate yourself to actually start setting money aside in order to build a rainy day fund.

Why an Emergency Fund Matters

If the above emergency fund apathy resonates with you, here are three significant considerations to help motivate you to build an emergency fund for when times get tough.

You’re a Single Income Household

There’s nothing quite as unnerving as having a single stream of income propping up your household. Anything from a mistake on the job to a grumpy boss or an unexpected executive order — like the COVID-19 quarantines that took place in early 2020 — can suddenly leave you bereft of an income. When that happens, it’s good to have a cash reserve to fall back on.

This rings even truer for the tens of millions of Americans who have come to depend on freelance incomes as the 21s century has progressed. Contractor gigs are notoriously unstable, and the need for an emergency fund to temporarily make ends meet is a very likely scenario at some point for most freelancers.

Borrowing in Times of Need is a Bad Idea

Borrowing money with interest is a tricky business at any time. The average Millennial already has $27,000 in debt, and the younger members of Generation Z are hot on their heels, having already amassed an average debt of $14,700 per person. While borrowing money is often necessary for major life events such as college tuition or buying a house, it’s dangerous to extend that borrowing mentality when it comes to getting out of an unforeseen financial situation.

This is especially true if you lean on a credit card to get some money quickly. Credit cards come with extremely high interest rates and should only be used when the money can be repaid in a timely manner. In other words, credit cards should always remain fair-weather friends. When used in times of trouble, they can lead to missed payments, damaged credit scores, and more money owed in the long run.

You Have Significant Recurring Expenses

Finally, regardless of how many streams of income you have or how much debt you owe, if you have significant recurring payments, it’s always a good idea to have enough cash to float your household expenses for a while.

Things like mortgage payments, utility bills, grocery budgets, and even the cost of internet service can add up quickly, and if they go unpaid they can lead to no electricity, hunger, and even homelessness.

How to Build an Emergency Fund

While there are plenty of reasons to have an emergency fund, actually building one can be a bit tricky. Here are a few steps to help you get started:

Start with a Budget

A rock-solid budget is always the first step towards healthy finances. Along with things like tracking income and expenses, having a buffer, allowing for discretionary spending, and paying down debt, any good budget will also include a plan for an emergency fund. The size of your fund and the speed that you save can vary, but it’s good to use your budget to start strategizing how you can save money on a regular basis.

Create a Debt Management Plan

If you have a lot of debt, you have to be careful how you parcel out your limited funds. If you aggressively set money aside to create an emergency fund but end up paying hundreds of dollars in credit card interest in the process, that will likely do more harm than good.

Instead, look for a good debt management tool like myFICO or Money Management International to understand how your debt works and how you can get it under control. Then, once you have a debt management plan in place, you can take stock of what cash is left over to save for a rainy day.

Separate Wants from Needs

It’s nice to have an emergency fund that will cover half a year or more of full paychecks, but the truth is, saving that much can be very difficult for most people. Instead, as you calculate how much money you should save in your fund, it’s important to separate wants from needs.

Figure out what your basic needs are (things like food, clothing, and shelter) and then make sure you have enough money in your fund to cover them for a while. The length of time that your fund is meant to cover can vary, but most emergency fund recommendations tend to suggest enough savings to cover between three and six months of necessary expenses.

Recognizing the Importance of an Emergency Fund

Millennials own a meager 3% of total U.S. wealth, exposing just how dire the financial situation is for so many younger Americans. With so much financial pressure, it’s easy to let seemingly superfluous things like emergency funds slip to the background as you address more pressing monetary matters.

However, there are many reasons that an emergency fund should be front and center in your plans. From the instability of single-income households and living paycheck to paycheck to chronically leaning on excessive debt, there are numerous reasons to make an effort to build up an emergency fund before your next emergency takes place.