How to Save For an Emergency Fund


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If you need extra money and worry about your emergency expenses, you should consider building an emergency fund. This fund should only be used for emergencies and should not be spent on non-emergencies, like a night out or your next payday. That way, it can grow to a substantial sum, and you won’t end up with a habit that you’ll be hard-pressed to break.

How to Save For an Emergency Fund

What is an emergency fund?

An emergency fund is an excellent thing to have on hand in emergencies. It prevents you from going into debt in times of need or scrambling to get money at the last minute. Building an emergency fund should be your first priority, followed by paying off any high-interest debt you might have.

Why is an emergency fund so important?

While you may not be thinking about a possible pandemic, an emergency fund is an important safety net that can protect you in case of job loss. Many jobs today are expendable, and there is a very high probability that many will be automated in the coming decades. Therefore, having more than one source of income is a good idea for everyone. This can be in rental property, dividend-yielding investments, a side-gig, or a part-time job.

If you need to borrow money fast, the best emergency loans can help you. When searching for an emergency loan, it’s important to consider your credit history. If you have poor credit, securing one is much more difficult. Trying to research different lenders may take up valuable time, and you may waste a lot of time and energy. But by following some guidelines, you’ll be able to find a good emergency loan with no hassle.

Why Do I Need an Emergency Fund?

Finding the right balance between saving and spending is critical, but having an emergency fund will give you a safety net when life throws you a curveball. An emergency fund is a good idea, but you should never put it off. Many ways to save extra money, including retirement savings and down payments on a house or college savings account.

8 Easy Steps to Get Your Emergency Fund Started

1. Make a budget and save

First, make a budget. You will have a better idea of how much you can afford if you have an emergency fund. List all the things you spend money on each month, including fixed and variable expenses. Estimate how much you spend on coffee, dry cleaning, and other expenses, and compare your actual spending to what you have in your bank account each month. Then, save a portion of this money each month for emergencies.

2. Make it as simple as possible

Make your emergency saving a priority on your spending plan. One way to simplify this process is to pay yourself first. You eliminate the temptation to use the money for other things by saving regular expenses. Paying yourself first will also help you avoid using your credit cards to cover unexpected expenses. The goal is to have 3-6 months’ worth of bills saved up.

3. Determine your emergency fund goal

Once you’ve set up an emergency fund, the next step is to determine how much you should put into it. Depending on your circumstances, this could range from three to six months’ salary. Fortunately, setting aside a small amount each month is better than none.

4. Create separate savings account for emergencies only

An emergency fund is not intended to replace a nest egg or a long-term savings plan. Instead, it should serve as an emergency safety net that you can access only if you have an unexpected expense. For this reason, you should set aside a certain amount each month to cover your basic living expenses or three to six months’ worth of expenses. This way, you’ll never be without cash.

5. Set up a direct deposit

Setting up a direct deposit can help you to set aside funds immediately. If your employer does not offer this feature, ask them to add your routing number and account number to their system. Some employers also allow you to set up multiple accounts to receive direct deposits. You may need to submit a voided check from your employer to set up a direct deposit. Once the process is complete, you can watch your savings add up.

6. Increase your savings

A secondary job can provide additional income or can be done from home. These little increments add up over time. To increase your emergency savings account, find a way to save by eliminating a monthly expense. This could include a weekly or monthly coffee outing or a movie streaming subscription. While these changes may seem small, they will add to a sizable emergency fund.

7. Sell items

Take a look in your closet and garage. Whether it’s a discarded sweater or a pair of shoes, it’s possible to sell something for a few dollars. You’ll be surprised at how quickly a few dollars can add up. Make a goal to save three to six months’ worth of expenses. Regardless of the amount, if you don’t have much extra money, you should consider setting up automatic transfers to put it in your savings account.

8. Save unexpected income

To start, set a goal of saving at least 10 percent of your monthly income. This goal is not always realistic, depending on your monthly expenses. Start small and increase the amount you save by a few percent each month. Aim for 10 percent, but remember that you may not be able to reach this goal right away. Starting small is key because you may not be able to ignore your savings in the bank account. You should also establish clear rules for emergency use of this money.


The emergency fund is a great tool to keep in mind when deciding what to do with your money. For example, an emergency fund can be beneficial if your car breaks down or an alternator fails, as expenses happen to everyone. In addition, an emergency fund can help you decide where you want to work in case your job is eliminated. Finally, a well-funded emergency fund can be a valuable tool for helping you reach your long-term financial goals.


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