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How To Save An Emergency Fund & How To Leave A Job

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In our inaugural edition of Ask Chelsea Anything, I’ll be tackling two very different (but very important!) questions. One is from a reader who wants to know how to save, and another is all about the art of leaving a job. So let’s get to it, and don’t forget, if you have a question for me, send it to

I might have a good answer for you, and if nothing else, my robust career in being a hot mess might just provide a cautionary tale!

Hi Chelsea,

I know how important it is to have an emergency fund, and make that a number-one saving priority. However, since starting my first full-time job in September I’ve put away big chunks every month and am not seeing the results I want. Do you and Lauren have suggestions for HOW to quickly create an emergency fund of somewhere between $6-8,000? I’ve seen your videos and read the articles about why it’s so important to have an emergency fund, but need a little guidance on how to best make that happen– what percent to save each month, what to cut out of my expenses to make it happen, etc. Can you help?


This is a good question, because having an emergency fund is pretty much one of the fundamental tenants of being a functional adult. As someone who has been to many check cashing places, had to borrow money many times, and has generally experienced her life going to shit because of an unintended expense when I was broke, I get how important it is. But despite this, I am still not where I need to be in terms of my fund (I have a couple grand, would like five figures so that I can cover myself and Marc if anything happens, I admit that him having robust savings has made this feel less urgent). That being said, having a few thousand dollars is light years away from where I was even a few years ago, when it was inconceivable for me to have money in my account that I was not actively spending on shit I didn’t need.

And to that end, I’ve found that — for me — there have been a really key few points to saving up.

First, I think the idea of doing it in big chunks out of your paycheck is a little backwards. I think when you do anything in extremes, financially, you are bound to fall off the wagon (as with a food diet, a financial diet must be sane and sustainable). So my first tip is to do it in smaller increments out of your paycheck and, most importantly, have that money automatically deposited each time your check hits (instead of manually transferring it, because the key is to not see and therefore get used to that money). Doing it in a smaller percentage of your overall check is better because, even if it takes a year or two to get what you need, you at least know that it’s manageable and something you can adapt to as a lifestyle.

When it comes to saving big chunks, I’ve found that a good way to do it, psychologically, is to take on a few extra projects whose earnings go directly to savings. It’s always been easier for me to say, okay, I’m going to do this extra job (let’s say it’s babysitting, for example) X times per month, and all babysitting money goes straight to savings (or towards a specific goal). This makes it easier for me to put those big chunks away, and also motivates me to take on those extra side jobs I might not, if I didn’t have something very concrete in mind to do with the money.

And as far as what to cut out, I like the idea of doing challenges for a determined period of time, as well as going through and seeing the things that would be painless to swap out or eliminate entirely. For a nice challenge, try an entire season without any new clothes (as well as a closet purge), or do 30 days without eating/drinking out. For things you can swap, I like to start by seeing what things you can buy generic, or what things you aren’t actively using (Mint was very helpful in me understanding where I was overspending). A combination of both is, for me, most sustainable, and doing the more overarching challenges helps you add to the second column, because you get a better idea of what you think you need, but don’t really. I started by doing a closet purge, and ended up pretty much unintentionally doing a year without fast fashion. You can create habits, and can also build off the lifestyle you already have.

For me, saving has been all about diversifying where I cut, and where I add. Some people are good at leading a really ascetic lifestyle, financially, and challenging themselves in a purely financial way. I’m not one of those people, but I do find that a mixed approach — even as a first-year entrepreneur, as I have been — allows for healthy savings goals to be reached.


Have you ever left any job without having one lined up? What advice would you give to someone who’s really unhappy at their job but also scared to leave without a new one?


I have left pretty much all of my jobs without one lined up, because most of my jobs as a ~youth~ I was fired from and/or quit on a whim, and, as an adult, I quit places to go freelance. (Usually, when freelancing, I quit only when I had enough basic income from a few different clients, but it was still risky nonetheless.) I was extremely irresponsible about my jobs until about the age of 21, and that tied heavily into my crust punk lifestyle that involved a lot of check-cashing places and cars I bought for $800 whose brakes didn’t work (this is 100% true, and as terrifying as it sounds). Either way, I lived in a YOLO way that was in absolutely no way advisable for a long time, and only through luck, I managed to escape it all relatively unscathed, save for a decimated credit score and no savings, as well as some former employers at shit jobs who almost certainly hate me.

All that to say, given my experience, I would not generally advise quitting a job with NOTHING lined up behind it.

But this doesn’t mean that you have to quit with a job that is societally perceived as “exactly comparable” to your current position in place. A lot of people feel that the idea of quitting without the absolute perfect position is impossible, and that’s part of what leads a lot of people to spend a lot of time at 9-to-5s that are outwardly impressive, but which they hate, for a miserable amount of time. They think that any option that isn’t equally-perfect will brand them a failure, or be simply too terrifying to take on.

I think, mentally and professionally, a good middle ground is to look at having some employment that will ensure your financial safety, as well as something lined up that is directly for your professional improvement (or potential evolution, if you’re looking to change industries). For example, I had a good friend quit a “prestigious” job this year because she wanted to move, and potentially change positions, and she lined up a few freelance gigs in the industry, as well as a supplementary part-time job that was not in the industry (I believe it was nannying), which allowed her to make the transition on her schedule. She’s now, months later and having moved, interviewing at places and potentially starting in a slightly different industry.

The key was that she never stopped developing herself, adding skills, and having tangible projects to work on. Importantly, she also never endangered herself financially (this was preceded by several months of saving, on top of her nannying gig). I think that the idea of going from salaried job to salaried job in every case is not always productive, and while it’s great if you can make it happen with a job you are happy with, if you are desperately unhappy in your current career, it might be an opportunity to explore other options and see if there are other skills you can actively develop or industries you can explore.

I think there is a big pressure around having the job lined up, instead of a job lined up, and that is what trips a lot of people up. If you are as unhappy as you say, it’s probably time to really confront why you feel that way, and if another job doing something very similar would really be a long-term answer. And while I don’t ever think you should swan dive without a deep body of water underneath you (as I have often done to my own detriment), I also think that body of water doesn’t necessarily have to look like exactly what society believes it does. What matters is just that you have something to break your fall.

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  • To Danielle: I echo what Chelsea said about having it automatically transferred out of your paycheck. If your company offers direct deposit, see if you can divert your direct deposit into two accounts so it never even hits your checking account. I was diligent about automatic transfers after every paycheck, but I didn’t *really* start to see my balance grow until it never landed in my account to begin with because I got used to assuming that I got paid $XX – $100 every check, rather than getting paid $XX & then transferring the $100. I think it’s just a mental thing, but it worked for me.

    I would also say divert a bit more than you think you can “afford” to, because your spending will likely adjust to accommodate that smaller amount. If you want raw numbers, I currently save 13% of my *take home pay*. This means that after taxes, health insurance, and 401k contributions, I live on 83% of my paycheck. (A lot of that money goes to shorter term savings goals that I don’t have separate accounts for — the 13% is strictly for my emergency fund account which does not get tapped for things like vacation & weddings. It’s for things like needing new brakes when I had a car, or when I was unemployed for 2 months last year.)

    You should also contribute to your 401k if your employer offers it. Definitely take advantage of any matching they offer, but don’t be afraid to go above that. This won’t be your emergency fund, but you have so much time on your side — even small amounts now will have DECADES to grow before you need it for retirement. Another benefit of the 401k is that you contribute money before taxes are taken out, so any percentage you contribute also reduces your tax burden. For example, if you make $40,000 and contribute 10% of your salary, you will be taxed as though you only make $36,000.

    If you want to find ways to cut your spending, I suggest tracking everything you spend for a month. Everyone talks about the ~latte factor~ but there are a lot of places money leaks out of our accounts that we don’t notice. Just yesterday I was charged for a Boingo Wireless account that I had closed years ago but somehow is now reactivated, but I probably wouldn’t have noticed the $10 charge if I wasn’t keeping track of my spending.

    Lastly, because this silly comment is now nearly as long as Chelsea’s article, keep reading TFD 🙂 Surrounding myself with people who talk about money, write about money, etc. has made it so much easier for me to pay attention to my own money!

    • chelseafagan

      Yes! And I should add to my answer, Mint was super helpful in helping my identify where I was wasting my money month-to-month. Will put that in now that I’m thinking of it!

      Thanks for your thoughtful comment 🙂

      • You’re welcome. I like thoughtful commenting on TFD 🙂

    • I think another good way to save big chunks, if you want to save more but can’t increase the automatic deposits you take from your paycheck or can’t take on extra work, is to put any tax refunds, monetary gifts/payouts, bonuses, or raises right into your savings. I did this when my grandpa died and a life insurance policy he had for me cashed out. I stashed that right in savings, didn’t touch it for over a year and, when I really needed to buy a car, I used part of that to one (with no loan). The remainder stayed in my emergency fund. Once that fund got big enough, I started to use unusual cash infusions (tax refund/bonus) to tackle my student loans. Now that I am unemployed, that emergency fund is enough to float me for the next year (coupled with unemployment compensation and extreme frugality). If you learn nothing else from TFD learn that you need an emergency fund.

      • 100% agree about putting those random windfalls to work! I’ve done that with bonuses, Christmas money, health & fitness reimbursements at work, etc. I sold my car last year, and that money went into a combination of retirement & long term investments. I also had a life insurance policy cashed out last year (that I didn’t even know existed) and it was just enough to max out my Roth IRA. Sometimes it’s surprising how often these unexpected windfalls happen and they’re so easy to fritter away to nothing. Really great advice Emma.

      • Winterlight

        I’ve done this and it really works. Especially the windfalls part. I also set up a fun account, so I’d take 90% of the windfall and put it in longterm/emergency savings and ten percent in fun. That way I didn’t feel deprived, but I wasn’t blowing money I needed.

    • One quick note–if you predict that by the time you retire and will cash out your 401k you will be making significantly more money AND you are making a relatively low salary now (say like 35k) you may want to consider having the money that goes into your 401k be taxed that way you won’t be taxed when it comes out.

      • It’s a tricky balance to be able to estimate what I’m going to be making when I retire, especially since I’m only 28 & that feels so far away. Plus, I can’t even begin to predict what will happen to the tax code in the next 35 years. I’ve decided that going tax free now & investing that extra money, in addition to maxing out my taxable Roth IRA as well as standard brokerage accounts & investments, is the best approach for me based on what information I know right now. Maybe that will change as I get older & closer to retirement though!

        • If you’re maxing out your Roth IRA, you’re in great shape 🙂

  • Michelle

    For the person on saving money, here are my percentages:Of my gross pay, i’m saving 6% in a 401k and ~$100 in an HSA (a healthcare savings account), both of these allow me to max out my employer contributions and realize some tax benefits. Those are tax deductible so after that i’m putting away

  • Michelle

    To the person trying to save money here are my percentages:

    10% of my gross pay goes to my 401k then an additional ~$100 goes into my HSA, this helps me pay a lot less in taxes. After that I’m putting an additional 13+% in my emergency savings then 5% into a travel fund. I already have a sizable savings so I have adopted a less aggressive savings strategy so I can put more into student loans. I’ve been bad though and have been known to buy Kirby vacuums so thank goodness for that emergency fund!

    I will probably be changing my 401k contribution to 6% though so I can save more into my emergency fund and because my family’s finance adviser says it’s really bad to invest right now, so i’ll probably save 19% once I figure out what my new take home pay is. I recently got a pay bump but was living in a much cheaper area before and was saving 26% of my take home pay which is very aggressive but I could afford it so I went for it. I highly recommend you see what your true budget is, then make a transfer into your savings account a budget category (Mint is great for this). It took me about a year to get to 10K and I am aiming for 20K now which will probably take less than a year with bonuses/tax refunds I know i’m getting. Long story short, budget first then figure out an ideal amount to hide away in savings because everybody’s income situation is different. Best of luck!

    • Don’t forget about the tax benefit of having that extra 4% in your 401k though. Conversely, my financial advisor suggested the opposite about investing. I just spent a ton of money buying into the market because it’s so low, and I’m investing for the very long term. I don’t plan on needing that money for at least five years, and probably way longer than that, so I’m betting that the market will definitely recover. There are so many schools of thought on this, so it’s really about what you’re comfortable with. There are also alternative investments to the stock market, like Lending Tree, that result in a better rate of return than even the highest interest savings account and aren’t susceptible to the market volatility.

      If you haven’t tried it already, I like using Personal Capital to show how my portfolio is balanced. They even offer suggestions on allocations based on your personal risk tolerance and also your future goals (buying a house, kids, retirement). It helps my brain understand things better with their helpful graphics, ha.

      26% is awesome though, congrats!

      • Michelle

        I totally want to open up that IRA account and max out my 401k but it doesn’t really help me right now 😔. I work in Oil and Gas so I have to be prepared with cash in case I get put on the chopping block like so many of my colleagues. I actually opened up that 1% interest ally savings account because I’m making more money there than my 401k, I’ve lost 3% in the last 4 months 😟.

        • Hi Michelle, have you considered P2P lending? You can put 10-20% of what you want to invest in there for slightly better results. You have to develop a strategy so be sure to read up a lot before u take the plunge.

          • Michelle

            Omgosh I need to look this up!!! Thank you for the advice 😀

        • Here’s my “secret” lol: I don’t look at my 401k balance lately because the market has been so crazy. I don’t need that money for another 30 years so I can’t let a 3% dip right now freak me out. But I have to ignore it in order to not freak out, ha.

          If you find yourself with A LOT of cash in that 1% account, you can always invest it in a regular brokerage account. That way it’s making money, but you can still sell it & get your money in a couple days should you find yourself in need of it.

          • Michelle

            This is all really great advice, thanks so much! Evaluating all this new info is going to have to be my weekend project 🙂

    • GBee

      I’m not a financial advisor by any means, but IMO now is the time to invest.

      I’ve always heard that you should buy low and sell high. And if you think about it, it really does make sense. My IRA is typically $65-$77/share when the market is good, currently it’s about $56/share. So I’m focusing on buying up as many shares as I can at the current low price.

      The market is always a risk, but I just wanted to give my opinion!

  • I agree with the response to LW1, don’t get too caught up with saving big amounts so that you don’t fall off the wagon. Consistency is the most important things.

    One thing that’s helped me is transferring whatever is left the day before payday into my emergency savings. This is in addition to my regular automatic savings. I challenge myself to have more and more leftover every month. Wishing you luck!

    • Summer

      That’s a really good idea, actually! I am notorious for getting paid, clicking over to the transfer screen, and thinking to myself, “hmm…maybe $200?” and using that as my “strategy” every two weeks. The problem is that it isn’t sustainable. If I know my next two weeks will have relatively low expenses, I might get ballsy and put $400-500 in savings, but then next time I get paid I might only be able to do $100. Sometimes nothing at all, depending on what has transpired. It’s super inconsistent and based on nothing specific. But I really like your idea of transferring the remaining balance before payday into savings. What a great way to give the account a little boost here and there (even if it is only, say, $11.62). Thanks for the tip!

    • jdub

      That’s a great idea! I usually transfer over $100 every paycheque, and then when it gets to the day or two before next payday, I’ll switch back like $50 for groceries or whatever. Since paying down a big chunk on my credit card though, it’s a bit more comforting to know that even if I don’t have actual cash in my bank account, I’m not totally screwed if something comes up that I didn’t budget/plan for.

      This amazing tip will definitely make it easier to take that leftover $40 on the Wednesday night before, and just stick that right into my savings account. Then it’ll be nice to not have to worry about it or think about the cash sitting there that I could technically “use” and think of ways I “need” it. Thank you so much for this!!