Financial airbags: How emergency savings cushion life’s shocks

It’s one of those things we all know we should do but may not prioritize. “Ask anyone who has faced a layoff or paid for ambulance transport: peace of mind is everything,” says Harmony Maghanoy, Financial Wellness Program Lead at HawaiiUSA Federal Credit Union. “Most emergencies come with a bill attached. When you don’t have to worry about the cost, it provides much-needed relief in a stressful situation.” 

Harmony shares answers to frequently asked questions: 

• How much should I save? Start with $500. If that feels overwhelming, shift your focus to building the habit—saving a little at a time rather than fixating on the total amount. The key to saving is consistency: set a clear goal and make small, regular deposits to strengthen your saving muscle. Automating the process with payroll deductions or automatic transfers makes it even easier to stay on track—set it and forget it. 

• Where should I keep my emergency savings? This money needs to be both accessible and safe. Keep your funds in a liquid account at an insured financial institution, such as a savings account. “It may not earn a lot of interest, but that’s not the purpose of this account. It’s there for peace of mind,” reminds Harmony.   

If your emergency savings are fully funded, different questions may arise: 

• What is considered an “emergency?” An expense that is truly unexpected and could not have been budgeted for, such as medical emergencies or loss of income.  

• Is there such a thing as too much emergency savings? Yes! If you have more than six months of living expenses saved up, you may be forgoing opportunities to optimize your money in the long-term. A financial coach or advisor can offer trusted guidance for your situation. 

 “Check in with your family, or even consider a fun savings challenge in your workplace,” encourages Harmony. “After all, emergencies that affect those in close proximity may impact you. We can all be better prepared to help others when we are prepared ourselves.” Find resources and schedule a coaching session at: hawaiiusafcu.com/EmergencySavings.