Creating an Emergency Plan Before You Need One
“Preparation doesn’t mean expecting the worst — it means being confident you can handle anything.”
Life doesn’t always give us a warning before things change. Whether it’s an unexpected job shift, a medical bill, or a major life transition, financial peace comes from being prepared before you need to be.
That’s why my husband and I recently started revisiting our own emergency plan — not out of fear, but out of intention. We realized that just like we plan for vacations, birthdays, or long-term goals, we also need a plan for the what-ifs. Often times these are the tough conversations people don’t want to have, but are necessary. Then, once you’re confident with your plan, you’ll have peace knowing all these tasks are taken care of.
Here’s what that looks like for us — and how you can begin building your own.
1. Start with Your Emergency Fund
An emergency fund is the foundation of any solid plan. Ours currently covers at least 6 months of essential expenses — and that didn’t happen overnight. I’m very thankful that each of us were responsible with money and had similar money values BEFORE we got married. For some reason people think it’s “taboo” or “not fun” to talk about money with someone you’re dating. If you plan to talk about money, you NEED to discuss money, even down to credit scores. Considering money’s one of the major reasons for divorce, it’s important to establish communication on this topic on a regular basis to ensure alignment.
Once we agreed on the amount, it was time to pick the type of account where we wanted to place our money. A regular savings account giving just 0.40% APY wasn’t going to help us reach our financial goals faster. Instead, we prioritized high yield savings accounts, which as of this article provide at least 3%. Specifically, a Discover online savings account provides 3.40% APY. To provide some context, $1000 in a standard savings account provides about $4 annually in interest, while the high-yield savings account (HYSA) would give about $34. It may not seem like much, but if you’re continuing to add to that amount, the compound interest adds up quickly.
We started small, setting aside a few hundred dollars each month until we built momentum. Don’t expect this to move quickly. We didn’t start seeing the impact of these regular deposits until about a year of this routine. It took alignment between the 2 of us to keep things going, even when it didn’t feel like much was happening. However, having that cushion gives us confidence that if something unexpected happens, we won’t have to rely on credit cards or drain our investments.
If you’re just beginning, aim for one month of expenses first, then gradually build toward 6–12 months. You’ll need to decide what works best for you in your situation. Even consistent, modest savings make a big difference over time.
👉 Pro Tip: Keeping this money in a HYSA separate from your checking account also makes it easy to access but not tempting to spend.
2. Map Out Your Financial Priorities
During an emergency, clarity helps you act quickly and calmly. Even before we were married I started setting money goals. At the time I was 30 and living at home with my mom. Yes, I paid her rent, but it wasn’t nearly the amount I would’ve paid had I been living on my own in the DMV. In December of that year I decided I wanted to focus on purchasing a home of my own, but I didn’t have any direction. That’s where money goals came in. I had never set them before, but it would be the last time I wouldn’t have money goals in my life.
Then, when I got married, we started creating financial goals together, including the creation of an emergency fund. This came with an examination of our combined expenses as a new family and identified which bills we’d cover first (housing, insurance, food, and transportation) and which ones could be reduced or paused. I would be remiss if I didn’t mention that me and my husband think of money differently. He just likes to have one combined account for savings, while I like to have different accounts for different goals. This doesn’t have to be a showstopper. Instead, it’s an opportunity to compromise to find out what works for you as a couple.
We’re also building a simple document outlining:
Where all our accounts are held
How to access passwords securely
Key insurance and contact information
We also keep a filing system of all our important paperwork. While this may seem unnecessary in this digital age, mortgage paperwork hasn’t caught up to that yet. It still requires a wet signature. (I’ve never signed so much paperwork in my life!). This is a system we started, but continue to modify as things change in our lives such as purchasing cars and planning for children. This way, either of us could manage things if the other couldn’t — and that peace of mind is priceless.
3. Include Investments in the Plan
Many people don’t realize that investments can also be part of your emergency strategy, though they should never replace your cash savings. I suggest prioritizing investments only AFTER you’ve achieved your savings goals.
Here’s how we think about it:
Our emergency savings is for immediate access — no market risk, no penalties.
Our investments (like a brokerage or retirement account) provide long-term flexibility and protection.
When you’re trying to address an emergency quickly, you want to know the money will be there with relatively easy access. Online HYSAs give you that access, while also providing an opportunity for growth when the money isn’t needed. One thing to note is that although there isn’t a penalty for removing your money from these accounts, you will need to pay taxes on the interest income that accumulates annually. It’s also important to agree on what an emergency is so you’re not draining your savings unnecessarily.
If a major life event stretched beyond 12 months, we could tap a taxable investment account (i.e., stocks, bonds, ETFs) or temporarily pause retirement contributions to redirect funds toward living expenses. This is only to be a short-term solution until you get back on your feet. If you can stomach it, do not pull from your retirement account. There are significant penalties and taxes associated with this kind of removal. Once the event has subsided, start contributing to those investment accounts so you can keep money in the market. Long term, this is how you’ll continue to build your wealth.
It’s not the first line of defense — but it’s part of the bigger safety net. This is where diversification works in your favor. Your money can be working for you in different ways, so take advantage of it in the good financial times and stack up your funds. Compound interest is your friend.
The key is balance: short-term liquidity and long-term growth.
4. Think Beyond Money
A true emergency plan isn’t just about cash. It’s also about resources, relationships, and readiness. Emergencies take an emotional tax on you and your family. Agree on who you can confide in to make this just a little more bearable.
We’ve discussed:
Who we could lean on for emotional or logistical support
Backup transportation plans if needed
How we’d earn extra income if one of us faced a job disruption
Most likely you won’t want to tell everyone you know about a job loss or financial issue. Build the relationships now to identify people you can trust with such a sensitive time in your life. This comes from tough conversations you can have with them now. I’ve learned that not all my friends are comfortable talking about money with others. When I need advice and guidance, I don’t want someone who’s hesitant. I want them to be upfront with me so I can start to make changes effectively.
When it comes to transportation, both my husband and I have cars and work remotely full time. Now while my car is paid off and doesn’t see much mileage, it’s still 10 years old. Anything can go wrong at any time. We’ve discussed the plan of what to do, should I need to purchase a newer car sooner than planned. If I need to go somewhere quickly I can borrow my husband’s car, which is much newer than mine. Considering I live in an area where a car is pretty essential, a plan is required. The goal is to know what your plan is in case you need to adjust your transportation plans.
In this current job market, having a plan for earning extra income is a necessity, not an option. The unemployment rate is increasing and everyone is learning that no industry is safe. It’s also taking longer for people in certain roles to find new positions. There’s no need to dwindle your savings down to nothing before you try to bring in extra income. You need to have a plan of how to do that now. Content creation and teaching CPR is how I earn more. My husband plays piano as his side hustle. If you’re not sure how you can bring in side income, ask AI. I’'m a huge fan of using AI as my best friend to consult about topics when I’m not sure what to do.
When you take a holistic approach, your plan becomes more resilient — financially, emotionally, and practically.
5. Keep Your Plan Updated
Our emergency plan isn’t a “set it and forget it” task. We review it at least twice a year, especially when our expenses, income, or goals change. One of our major goals this year is to purchase a new home. We’ve been saving up for years, and we’re finally at a point where we feel comfortable seriously house shopping. Right now we live in a condo, and the expenses are significantly less than owning a single family home. There is no yard work, lawn care, or roof repairs. With a single family home, everything will be dependent on us. We need to have a buffer in our savings to account for the unknown unknowns of owning a single family home.
We also check in with each other to determine if there are any major events that are going to be a significant cost to us. Typically this would be a vacation or any parties we’re looking to host. Now that we’re planning for a little one, a baby shower is a major event we have on the calendar. We’re also thinking about hosting a combined housewarming and 5-year anniversary party. Both will cost thousands of dollars, which is pretty significant for us. We’re making the plans now to decide what to do, but it’s something that impacts our plans.
Whatever you have going on, adjust your financial goals as events come and go. It’s also important to communicate these changes with your partner so you’re on the same page. Just like your health or your home, your financial safety net needs maintenance. Regular check-ins ensure your plan stays aligned with your current reality.
Building Peace Through Preparation
Creating an emergency plan isn’t about expecting the worst — it’s about building confidence in your ability to handle whatever comes.
If you’re ready to create your own plan, the Money Made Friendly Manual can guide you step-by-step through the process. It helps you set financial priorities, build an emergency fund, and prepare for unexpected challenges with grace and strategy.
Because when life gets unpredictable, preparation is the calm in the storm.
