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Life is completely unpredictable–you never know what’s going to happen, either tomorrow or years down the road. Emergencies, from medical accidents to home damage to family crises, happen to even the most careful people. That’s why it’s so important to be financially prepared for whatever life throws your way.
The best way to prepare yourself for emergencies is to build a solid emergency fund. An emergency fund is a money that’s set aside to be used during times of trouble. It should be enough for you to maintain your lifestyle for a set number of weeks or months.
Although it may seem like a daunting task, saving a significant amount of money for emergencies is totally doable. Trust me; your future self will be thankful!
How To Build An Emergency Fund
In this article, I’ll go over 12 awesome strategies that you can use to start building that all-important emergency fund. Before you know it, you’ll have the peace of mind in knowing that you’re covered, no matter what happens next.
Create a realistic goal.
Setting a goal for your emergency fund will give you a reasonable amount to strive for. Choose a goal that’s realistic for you–if you can only afford to save a few hundred dollars, don’t sweat it! Just do the best you can.
It’s important for your goal to be realistic. Be sure to consider your income and expenses before deciding how much money to add to your emergency fund each month.
2. Budget, budget, budget!
Sticking to a budget is essential if you want to stay on track with your saving goals. When you decide to build an emergency fund, adjust your budget, so more money goes toward that fund.
Having a budget will keep your finances organized and can help minimize compulsive spending. Keep track of what you spend, making sure only to buy what the budget allows.
I know it’s hard to stick to a tight budget. But, this is the only way to make sure money regularly goes toward your emergency fund. Just keeping to your budget now can truly save your finances during a crisis.
3. Use cash and change to manage your spending.
When you’re swiping a card instead of using actual cash, it’s much harder to have a sense of the money you’re really spending. Keep your spending under control by using cash for day-to-day purchases.
Using cash is great for me because I can withdraw only the amount of money I have budgeted to spend. Then, once I’ve spent the cash, I know that I have to stop if I want to stay on track.
Instead of letting those nickels, dimes, and quarters sit unused in your wallet or car, put them to good use! Start a jar for spare change to add to your emergency fund. When the jar is full, bring it to the bank and deposit it into your emergency savings account–it’s so satisfying to see those small coins add up.
4. Put your rarely used stuff up for sale.
It’s crazy how much extra cash you can make just by selling stuff that you hardly ever use. You won’t even notice that these items are gone, but you can put the extra cash you make from selling them into your emergency fund.
You might be surprised by how many of your lightly used possessions can be sold for a great price. DVDs, furniture, clothing, accessories, CDs, books, bicycles, and electronics can all make a big sale, as long as they’re still in good condition.
Selling your unwanted items is a win-win-win: Your living space gets decluttered, you make extra money to build your fund faster, and you’re recycling, all at the same time!
5. Start a side-hustle.
If you have a little extra time to spare, you can make some money for your emergency fund with a side gig or two. If you have 8-10 hours to spare each week, consider a part-time job to pull in that extra cash. But, even if you only have an hour or two of extra time, you can still find a profitable side job.
Completing online surveys is one awesome side-hustle that you can start right from home. A few of my favorite sites are Swagbucks, Inbox Dollars, and My Points. You won’t make loads of extra money on survey sites, but you can earn enough to make your savings grow faster.
For more ideas on how to find a side-hustle to make money for your emergency fund, check out my complete guide to making extra money here:
6. Cut down on extra expenses.
Limiting non-essential purchases is a big key to success while you’re saving for your emergency fund. I love vacations, spa visits, and movie tickets just as much as the next person, but when I’m saving up, I keep them to a minimum.
Go for cheaper alternatives to those pricey luxuries: have a movie night at home instead of spending $10 at the theatre; have fun with home workouts instead of using a gym membership; skip the mall and go thrifting instead.
Get creative to cut out extra expenses so you can put that money into your emergency fund.
7. Choose affordable transportation options.
The price of gas can really add up, taking money that could be put into your fund. Save on transportation by:
- Carpooling: Start a carpool with friends and coworkers who live nearby. You can carpool to work, when you go out for fun, when you run errands, etc. You’ll both save money on gas, and you’ll only have to drive half of the time!
- Using public transportation: If you live somewhere that offers convenient public transit, take advantage of it! Not only is it much cheaper than using a car, but it’s great for the environment as well.
- Walking or biking: When the weather's nice and you’re only travelling a short distance, consider walking or biking. It’s totally free, and you’ll get a great workout in the process!
8. Cook in instead of eating out.
I know how it is–some nights, you just really don’t feel like cooking, or maybe you’re craving your favorite dish from a restaurant. But, your emergency fund can build up so much faster if you choose to save money instead of eating out.
Instead of planning a night out at a restaurant with your friends, have a fun dinner party or potluck at home! You’ll get to enjoy each other’s company and have a nice meal together, without neglecting your emergency fund.
Looking for ways to save money on your grocery bill?
Read this article here: How to save money on your supermarket shopping.
9. Save on your electricity bill.
Shave a little money off of your electricity bill to put toward your emergency fund–it’s a great way to reach your goal faster. Heating and air conditioning can get expensive. Make sure to keep an eye on the thermostat and turn off the heat or air when no one’s home.
Using energy-efficient light bulbs and unplugging electronics while they’re not in use will put a little extra cash in your pocket each month. Then, you can put that money right into your emergency fund to use when you really need it.
Related Post: How to save money on electricity bills.
10. Use cashback sites.
A fantastic way to make a little extra money for your emergency fund is to join cashback sites. I love doing this because I can bring in a little extra cash just by shopping, which is something I would be doing anyway.
11. Take advantage of coupons and discounts.
Before you head out to the store or purchase something online, make sure you’re getting the best possible deal on it. Pay attention to discounts and closeouts –you can save so much money by always shopping the sales.
There are tons of amazing coupons for all sorts of items available online. Just by doing 10 minutes of online couponing research, you can save money for emergencies.
Join the email lists of your favorite stores so that you’ll get notified whenever there’s a sale. I buy far fewer things for full-price than I used to, just by scoping out deals before I go shopping.
Need more money-saving ideas? Check out this article
12. Resist the Spending Temptation
Maybe you see a new pair of designer shoes that you love, or all of your friends are going out to a high-end restaurant–the temptation to spend is going to strike while you’re trying to build an emergency fund. It can get hard not to spend the extra cash you’re saving up, but believe me–it’s completely doable!
Conclusion on how to build an emergency fund
The key to saving your cash instead of spending it is to remember why you’re building this fund in the first place. The world we live in isn’t perfect: your house could flood, your car could get wrecked, or you could have to move suddenly.
We all need to be financially prepared for unexpected difficulties.
Your emergency fund will be there to take care of you when life throws a wrench in the works. With the money you saved up to help you, you’ll be able to get back on your feet and start living a normal life again.
Having that financial safety net is so worth it, and with a little hard work, you’ll have it saved up soon!
What's holding you back from starting an emergency fund? Let us know in the comments.