Emergency Savings — slides
Financial Literacy Club
Money Fundamentals · Lesson 6
Emergency Savings
Why an emergency fund keeps small surprises from becoming debt, and how much to aim for.
10-minute lesson · learnwithflc.org
Emergency Savings · 1 / 21
Financial Literacy Club
Money Fundamentals · Lesson 6
Emergency Savings
Why an emergency fund keeps small surprises from becoming debt, and how much to aim for.
10-minute lesson · learnwithflc.org
Today's goals
By the end of class, you'll be able to…
- Define a true emergency: unexpected, necessary, and urgent
- Set a starter goal and a 3–6 month emergency fund goal
- Explain how an emergency fund keeps surprises from becoming debt
Warm-up
Your car needs a $600 repair tomorrow. List three ways you could pay for it. Which is best, and why?
Think, then write your answer.
The big idea
Emergency Savings
Why an emergency fund keeps small surprises from becoming debt, and how much to aim for.
Money Fundamentals · Lesson 6
An emergency fund is money set aside for surprises you can't skip: a car repair, a medical bill, a broken laptop you need for school, or losing a job.
Money Fundamentals · Lesson 6
Without one, emergencies usually end up on a credit card or a loan. That means paying interest on top of the emergency — and a $600 problem can quietly become a much bigger one.
Vocabulary
A true emergency
Something that's unexpected, necessary, and urgent. All three. A sale on shoes is none of them.
Money Fundamentals · Lesson 6
How much? A common guideline for adults is 3 to 6 months of essential expenses. That's a big number, so start with a starter goal — a few hundred dollars, or $500 to $1,000. For a student living at home, even one month of your own expenses is a strong start.
Money Fundamentals · Lesson 6
Where? Somewhere safe and easy to reach, like a savings account — ideally separate from checking. Not in stocks: the market could be down exactly when you need the money.
Money Fundamentals · Lesson 6
Predictable isn't an emergency
Car registration, holiday gifts, and yearly subscriptions are expected. Save for them separately in small monthly amounts (sometimes called "sinking funds") so they don't drain your emergency fund.
See it
Paying a $600 repair from an emergency fund costs $600. Putting it on a credit card at a hypothetical 24% APR and paying $50 a month takes about 14 months and costs about $693 in total.
From an emergency fund
On a credit card (24% APR, $50/mo, 14 months)
Real example
Diego's starter fund
Diego, 18, sets a starter goal of $500. He moves $25 a week from his paycheck into savings. Twenty weeks later, he's there.
A month after that, his phone screen cracks ($180) and his laptop charger dies ($65). Annoying — but not a crisis. He pays from the fund, then keeps his $25 a week going to refill it.
Without the fund, putting $600 of surprises on a card at a hypothetical 24% APR and paying $50 a month would take about 14 months and cost about $93 in interest.
Try it together
Try it: set your emergency fund goal
Enter your essential monthly expenses and see how long it takes to reach your goal.
Your numbers
Needs only: housing, food, transportation, bills.
Results
Emergency fund goal
$400
1 month × $400 of essentials
Still to save
$350
Time to reach it
6 months
Saving $60 a month
Educational calculator, not financial advice. Results are hypothetical estimates based on the numbers you enter.
Activity · pairs · 10 min
Emergency or Not?
- Give pairs ten scenario cards: car repair, concert tickets on sale, cracked phone screen, yearly car registration, ER copay, holiday gifts, job loss, laptop breaks mid-semester, flight for a family emergency, new game release.
- Pairs sort each card: true emergency, predictable cost, or want.
- Discuss: predictable costs (registration, gifts) need their own savings, not the emergency fund.
- Pairs calculate 3- and 6-month goals for someone whose essential expenses are $1,400 a month.
Check for understanding · 1 of 3
Which of these is a true emergency-fund expense?
- ATickets to a sold-out concert
- BHoliday gifts in December
- CA shoe sale that ends tonight
- DA surprise $400 car repair you need to get to work
D. A surprise $400 car repair you need to get to work
It's unexpected, necessary, and urgent. Holiday gifts are predictable (plan for them separately), and the others are wants.
Check for understanding · 2 of 3
Your essential expenses are $1,500 a month.
What's a 3-month emergency fund target?
- A$1,500
- B$4,500
- C$3,000
- D$9,000
B. $4,500
$1,500 × 3 months = $4,500. Use essential expenses only — not wants.
Check for understanding · 3 of 3
It's smart to keep your emergency fund in individual stocks so it can grow faster.
- True
- False
False
Stocks can fall at any time — including right when you need the money. Emergency funds belong somewhere safe and easy to reach, like a savings account.
Remember
Key takeaways
- A true emergency is unexpected, necessary, and urgent.
- Start with a starter goal, then build toward 3–6 months of essential expenses.
- Keep it safe and reachable — a savings account, not stocks.
- Plan for predictable costs separately.
- Refill the fund after you use it.
Discuss
Talk it over
- Why might an emergency fund matter even more for someone with an unpredictable income, like tips or gig work?
- What's a realistic starter emergency fund for someone your age? Why?
Exit ticket
What three things make something a true emergency?
Answer on your exit ticket before you leave.
Nice work today.
Review this lesson anytime — free, no account needed:
learnwithflc.org/courses/money-fundamentals/emergency-savings
Next up: finish your worksheet.