How to Build an Emergency Fund as a College Student

by Jalen & Sarah Bromley

Getting through life on a college student’s budget is tough at the best of times. If you throw an expensive emergency like a car repair into the mix things can quickly go from bad to worse — yet 61% of students have less than $1,000 in their savings account. Without an emergency fund, this can easily land students in hot water.

If you don’t want to be one of them, it’s time to start building your emergency fund. This post will cover why students need an emergency fund, where to put it, and how you can get started.

What is an emergency fund?

Let’s make sure we’re clear: an emergency fund is a pot of money you set aside to cover unforeseen expenses. 

Deciding what classes as an “emergency” will always involve an element of discretion, but the key is to focus on expenses that are both necessary and a surprise.

If your friend invites you on a spring break trip to Cancun, it’s an unexpected expense — but most of us would agree that vacation isn’t strictly necessary. Paying for your groceries is a necessity. However, we should ideally put money aside for fixed expenses through budgeting instead of dipping into our emergency funds.

Typical examples of when to spend your emergency fund include:

  • Replacements for broken or stolen items
  • Medical expenses 
  • Family emergencies 
  • A job loss

Should students have an emergency fund?

At this point, you can probably guess the answer to this question. Yes — students absolutely need an emergency fund. 

Here’s why.

Avoid bad situations 

When you’re at college, you may not consider yourself an “adult.”Others may even give you a pass for making reckless decisions because you’re young and need to enjoy life. 

But this is a time in your life when your final decisions can make or break you. 

You’ve probably already taken out a significant student loan to pay for your college tuition, and you may have additional financial obligations like a car loan or rent contract.

If you suddenly can’t cover these expenses, you could run into some serious trouble. For instance, you might have to put purchases on your credit card that you know you won’t be able to pay off once your bill comes. In more extreme cases, you might even resort to a payday loan or cash advance.

All of these options carry high interest rates, meaning you’ll soon owe the lenders more than you borrowed. This creates a vicious cycle where your debt payments increase your fixed expenses, putting you in an even worse financial situation.

An emergency fund prevents this outcome. Instead of taking on debt, you can dip into the fund meant for times like this.

Set yourself up for a solid financial future 

Even if you use your credit card wisely and never take out a payday loan, having an emergency fund in college can still be beneficial. It will help you build solid financial habits for the future.

Practicing saving at this early stage in your life will make it easier for you to reach other financial goals. After all, there’s a lot we need to save for — from a house to retirement funds to your childrens’ college education. 

Around one in five Americans have no emergency savings at all. Making the right moves now decreases your chances of being one of them.

Peace of mind

Knowing that something as simple as dropping your phone down the toilet would ruin you financially is a huge burden to carry around with you. 

Meanwhile, when you know that you have a solid emergency fund to help you coast through life, you’ll be surprised at how much better you sleep! If you won’t build an emergency fund for future you’s financial goals, do it for present you’s mental health.

How much should my emergency fund be as a college student?

Now you know that an emergency fund is a must, it’s time to talk numbers. 

There’s not one magic number that dictates how big a college student’s emergency fund should be. 

It will depend on a few factors, including your preferences and your future goals.

But the main thing to consider is your living expenses. Most financial experts recommend putting aside enough money to cover your expenses for three to six months. For example, if you spend $1,500 a month on basic expenses, you’d need between $4,500 and $9,000 in total.

Some college students might find themselves in the fortunate position of living with their parents without having to contribute financially,  meaning that their expenses are next to nothing. 

In this case, you may want to increase your emergency fund beyond your typical living expenses and consider how much it would cost to live elsewhere. After all, there may be some emergencies where this is your only option.

Where should I put my college fund?

Ideally, you should keep money for your fixed expenses, discretionary expenses, and emergency fund separate. This way, you’ll be able to avoid the temptation of dipping into your emergency fund for non-essential expenses.

You may also need multiple separate savings accounts if you’re already saving for a different goal, such as a vacation or house purchase.

An easy-access, high-yield savings account is often the best place to store your cash. It allows you to access the money whenever you need it, but means you’ll still be able to take advantage of interest rates that will grow your money over time. Every little helps!

How to build an emergency fund as a college student

After reading some of the numbers above, building an emergency fund might feel like a distant dream. Scraping together the funds to feed and clothe yourself while also covering your tuition is hard enough without having to save thousands on the side.

Don’t despair — here are a few tips to help you start stacking the cash.

Sudden windfalls

If you’re lucky enough to receive money from your family on special occasions like your birthday or the holiday season, they can go a long way toward your emergency fund.

You may also be able to save other windfalls, like tax refunds — or even a ten-dollar bill you find in an old jacket pocket.

Part-time work

You might be reading this as someone who already works yet still can’t get together enough money for an emergency fund to cover all your expenses. In that case, feel free to roll your eyes and move on.

But if you think you still have some spare time you could dedicate to working, it’s worth putting in the time upfront to give yourself peace of mind later. You don’t necessarily have to take on a conventional “job” — check out these creative side hustles instead. 


Building your emergency fund isn’t all about bringing more cash in. An alternative strategy is to cut your spending or build a budget instead.

If you can’t afford to put much money aside now, it might take you a while to grow that emergency fund. But if you spare a little cash every week for long enough, those contributions will eventually add up to enough to fill that emergency fund.

You can also use apps that automate the process by setting up small but regular deposits to your savings accounts that you’ll barely notice. Mint and Acorns both offer this service.


Now lets round things off with a couple of questions.

Should I pay off student loans or build an emergency fund?

If you have public student loans, it’s often wise to prioritize your emergency fund to avoid taking on “bad debt” like credit cards. But if you have private student loans, you may want to tackle them first due to the higher interest rates and lack of leniency for borrowers experiencing financial hardship.

Is $5,000 enough for an emergency fund?

If $5,000 would cover your expenses for at least three months, it’s likely sufficient for your emergency fund. Otherwise, you may need to save more.

How much should a 22-year-old have in an emergency fund?

It depends entirely on that 22-year-old’s situation. Generally, they should build an emergency fund worth at least three months of their expenses.

Start building a new financial future today

If you haven’t started building your emergency fund yet, the prospect of going from zero to thousands of dollars might seem like an insurmountable mountain. But it’s okay to take things month by month (or even week by week). Sticking to it will be worth it to set you up for a great financial future and peace of mind.

But an emergency fund is just the beginning of your financial journey. For more tips, subscribe to the Frugal Student mailing list for more advice tailored to college students who want to be smart with their money.

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