7 Tips for Building Your Emergency Fund
Emergencies. It’s not a matter of if. It’s a matter of when. Life throws us all curveballs every now and then. (Didn’t realize that rhymed until after the fact #rapskills lol).
For my husband and me, it’s been anything from his phone breaking to our car dying and quite a few other things in between.🙄
And when I say “emergency” I’m referring to any situation that fits all of the following criteria:
It’s unexpected (So, not things like Christmas gifts. Christmas is pretty predictable. It’s December 25th every time 😉).
It’s necessary. (So, not that vacation you’ve been itching to go on. I’ll be the first to admit 🙋🏽♀️ that sometimes a vacation feels absolutely necessary, but, alas, it’s not.😔)
It’s urgent. (I’m talking major consequences for not handling it right away.)
We can’t always avoid emergencies, but we can be prepared for them by building up a solid emergency fund. The point of an emergency fund is to cushion the financial blow of emergencies.
When you have an emergency fund, it helps you avoid dipping into savings. It’s never fun backtracking on your savings goals.
And, arguably an even bigger deal: An emergency fund helps you avoid taking on debt that you’ll have to pay off with interest later.
Emergency funds are crucial. So, here are 7 tips to help you successfully build up and maintain an emergency fund as quickly as possible.
1. Build emergency fund savings into your budget.
Create a line item in your budget that is specifically for your emergency fund. Then, as you plan the amounts you want to allot for each line item of your budget, you can deliberately choose for some of that money to go towards your emergency fund.
This is helpful because it ensures that you’re contributing something to your emergency fund every month. Consistency is key to successful saving.
And when you’ve budgeted so every dollar has its place, you’re less likely to spend what you originally wanted to save for your emergency fund. After all, you’ll already have separate money budgeted for all your spending needs throughout the month.
2. Put any unspent money towards your emergency fund.
I love it when we review our budget at the end of the month and discover that there’s a little money left unspent. Such a great feeling!🎉
In the months where there’s money left over in your budget, put it towards your emergency fund. And keep doing this until your emergency fund is fully-funded.
3. Keep your emergency fund in a separate high-yield savings account.
It’s important to make sure your emergency fund is set apart from all of the rest of your money. That’s how you make sure you don’t dip into it for non-emergency spending. Discipline is another key to your success when it comes to saving.
You can open a separate savings account for your emergency fund. And if it’ll really help you to stay disciplined, you can open that savings account in a separate bank than where you do your regular, everyday banking.
Just make sure the money is easily accessible. Emergencies are, after all, unexpected and urgent. So, you need to be able to get to your money on the spot.
4. Set up an automatic transfer into your emergency fund account.
This is one sure-fire way to avoid spending the money you intended to save for your emergency fund. Every month, a designated amount gets pulled from your checking account to go straight into your emergency fund.
Since you set up this transfer to happen automatically, it’s out of sight, out of mind. But you’re still making consistent progress towards your emergency fund savings goal! 😃
5. Cut back on a spending area, and redirect that money to your emergency fund.
Take a look at your current spending. If there are any areas where you’re able and willing to cut back – even just a little – do it! Then, the money that you save by cutting back can go into your emergency fund.
It’s only temporary, in order to give your emergency fund savings a boost until it’s complete.
And if you don’t want to cut back in the same area month after month, choose a different area each month. This might make reducing your spending feel less restrictive.
For some great ideas on where to cut back (without sacrificing your lifestyle), check out my freebie, 9 Ways to Find More Money in Your Budget!
A little extra money in your budget would be a great way to boost your emergency savings!
Get your FREE download of 9 Ways to Find More Money in Your Budget!
6. Do a side hustle.
Side hustles can be a great way to make some extra money. And with today’s gig economy thriving, there are SO many options. Just to name a few…
Rideshares (i.e. Uber or Lyft)
Food delivery (i.e. Uber Eats or Doordash)
Grocery delivery (i.e. Shipt or Instacart)
Oddjobs (i.e. TaskRabbit)
Freelancing (i.e. Upwork or Fiverr)
My husband and I have dabbled in quite a few of these and side-hustled our way to everything from a fully-funded emergency fund to vacation!
What’s cool about side hustles is the flexibility. You decide your schedule. And you can choose a side hustle that fits your lifestyle. Some you leave the house to do. Others you can do from your computer in the comfort of your own home.
7. Do a savings challenge.
A savings challenge is another great way to give your emergency fund a boost.
It can get you hyped up and motivated! It can also keep you focused since there’s such a definite end goal that you’re trying to reach.
If you need some savings challenge ideas, check out my blog post, 8 Fun, Easy, and Unique Savings Challenges!
Conclusion
Everyone needs an emergency fund. Unfortunately, none of us are exempt from the unexpected craziness of life. With that being said, building (and maintaining) a solid emergency fund should be a priority.
The tips I suggested above will help you build your emergency fund strategically, consistently, and as quickly as possible! With an emergency fund in place, you’ll be prepared to weather life’s storms without taking a huge hit to your finances.
Which tip did you find most helpful? Do you have any other tips to suggest? Share in the comments below!
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