Insights inspired by recent Morningstar research
Most people know they should have an emergency fund. It’s one of the first rules of good money management: put aside a safety buffer so that when life surprises you — a medical bill, job loss, or car repair — you don’t go into debt.
Yet a recent piece of research from Morningstar found something surprising: even among households earning more than $100,000 a year, a large number still don’t have enough saved for emergencies. Many have very little, and some have nothing at all.
So why is something so important still so hard to do?
Good Financial Habits Depend on How You Feel About Money
Morningstar’s study revealed a powerful insight: people are more likely to build strong financial habits when they feel financially secure. It’s not just about how much money they have — it’s also about their mindset.
Think of it like a loop:
Feeling in control → more likely to save → saving improves confidence → confidence motivates more saving.
But the reverse is also true. If someone feels uncertain, stressed, or behind financially, it becomes much harder to start (or stick to) saving. Even higher-income earners can fall into this cycle.
Only 41% Had Even a Basic Emergency Fund
Morningstar looked at whether people had saved at least half of three months’ salary — a very modest benchmark for emergency savings. Only 41% had reached that level. And even more surprisingly, around one in four had almost nothing tucked away.
Even households who seemed “well-off” on paper — with healthy investable assets and a positive view of their finances — weren’t immune. Nearly 30% of this group still had insufficient emergency savings.
This tells us the problem isn’t always income or intelligence. Often, it’s simply a habit that never formed.
Why People Don’t Build the Habit
Three patterns stood out in the data:
1. Lack of confidence
If people don’t feel capable of managing their money, they avoid taking action — even if they earn good income.
2. No clear target
Many families don’t know how much they should be saving, so they never start.
3. No plan
Even when people want to save, they get lost in the “how”. Which account? How much each month? How do you automate it? Without a step-by-step plan, motivation fizzles.
What Everyday Families Can Do
While the research was aimed at advisers, the lessons apply directly to normal households.
1. Start with small wins
Saving $20 or $50 a week may not seem like much, but it builds confidence — and confidence leads to consistency.
2. Set a realistic target
A simple starting point is aiming for three months of essential expenses. Break it into smaller monthly amounts so it feels achievable.
3. Make saving automatic
Once the plan exists, automate it. A scheduled transfer removes the emotional load and turns saving into a routine rather than a decision.
4. Keep your emergency fund separate
A different bank or a high-interest savings account makes it harder to spend impulsively.
Final Thoughts
Morningstar’s research makes one thing clear: the biggest barrier to building an emergency fund isn’t income — it’s behaviour. With the right mindset, a clear plan, and small, consistent steps, every family can build a stronger financial safety net.
If you’d like help designing your own emergency savings plan, I’m always here to guide you.