Life can be unpredictable, and anything can happen when you least expect it.
You can lose your job, suddenly get ill, or find yourself with expensive car repairs.
Some of these catastrophic events occur at any time, so you must prepare and build up an emergency fund.
A survey by Bankrate shows just 47% of Americans indicate they have sufficient liquidity or access to funds to cover a $1,000 emergency expense.
If you’re thinking of building an emergency fund and creating security for you and your loved ones, read on as we explore 12 creative ways to start building an emergency fund.
1. Decide on the Right Amount To Set Aside
Financial experts advise setting aside enough to cover three to six months of expenses for an emergency fund. However, this is relative and varies depending on your dependents, the type of job you have, and other factors.
The best way to determine the right amount is to evaluate your current expenses and set aside money to cover them for at least a year.
2. Don’t Be Afraid To Start Small
Don’t wait until you earn a certain amount to build an emergency fund. You can set aside any amount until you reach your target. Even if you just put $5 a month away, it will be better than nothing.
3. Find the Best Account
Knowing where you put your emergency savings can mean the difference between growing your finances and remaining stagnant. Avoid stashing the funds away in any account and instead put them into a money market or a high-yield savings account.
These accounts also make compound interest, which means you get to earn interest on the interest from your funds. Over time, you’ll build a bigger emergency fund and maximize the returns on your savings.
4. Include the Emergency Fund in Your Budget
One of the simplest ways to build an emergency fund is to account for it in your budget.
Having it as an expense in your budget lets you divert some cash to it and save more. Additionally, a budget will help you identify unnecessary expenses and use that money to build your emergency fund.
5. Automate Your Deposits
Focus on setting up direct deposit from your paycheck to your emergency fund savings account to cultivate a savings habit.
Automating your savings ensures you don’t forget or neglect to follow through, making you more disciplined.
6. Put Any Unexpected Cash Into Your Emergency Fund.
Did you get a raise at work? Did you just receive an annual bonus?
Put any unexpected cash or windfall into your emergency fund and save it. That will help you achieve your financial goals faster and build your fund.
7. Use Discounts and Rewards to Supplement the Emergency Fund
Use any discounts/rewards you get when shopping online and redirect the cashback earnings to your emergency fund. That will help you to build up your emergency fund quickly.
8. Find a Side Hustle To Increase Your Emergency Savings
If you struggle to survive on one income, look for opportunities to increase your earning potential.
You can find a second job, start a part-time side hustle, or work additional hours at your job. The extra earnings can go into your emergency savings account.
9. Declutter and Invest the Extra Cash
Do you have toys, furniture, or clothes you no longer need?
You can sell these items at a garage sale or on online marketplaces to earn money. The extra cash can be redirected into your emergency savings.
Feeling overwhelmed by clutter? Join the 30 Bags in 30 Days Declutter Challenge and take the first step toward a more organized home! This free printable makes it easy to stay on track with one simple goal each day—no stress, just steady progress. Download it now and start clearing space for what truly matters.
10. Cut Down on Unnecessary Expenses
Look for areas where you can reduce your expenses and use the money to build your emergency fund.
You can reduce unnecessary subscriptions, reduce regular takeouts, use coupons, and ditch your credit cards to save more money to bulk up your emergency fund.
11. Don’t Stop Saving
Don’t stop saving once you reach your emergency savings goal. Replenish the account if you’ve recently dipped into it. You can also set up another savings account for your next financial goal, like a house down payment or an upcoming vacation.
12. Review Your Emergency Fund Plan
Things change, and your monthly expenses may increase, or you may get a better-paying job.
Make sure that you review your emergency fund plan regularly and make any adjustments as needed. For example, if you get a higher-paying job, you can put more into your emergency fund.
An emergency fund can help you cover unexpected medical expenses, perform car repairs, or handle major home repairs. Building an emergency fund can help you achieve financial security and give you peace of mind that you can handle any unexpected events.
