9 Simple Ways to Build an Emergency Fund

posted in: Banking Tips, Savings | 0

If you do not have an emergency fund set aside, it’s time to start building it.

Over 60% of Americans say they are unable to cover an unexpected setback of $1000 with their own savings. With the uncertainty that many have with job security, it is more important than ever to have an emergency fund for when hard times inevitably come.

Here are nine ways to help get you started down the path of better financial security.


1. Set Your Goal

Setting a realistic goal for your emergency fund is important. Review your net income and your necessary living expenses to create a monthly goal for savings. Start with the goal of an emergency fund equal to 3 months of expenses. Ideally, your emergency fund amount should equal 6 months of living expenses.

Of course creating a goal is somewhat useless if you do not hold yourself accountable for realizing that goal, so it is important to track your progress and achieve it. DO NOT loot this fund unless it is a real emergency, you will only be cheating your long term goals in favor of the short term. Once you reach your goal, you will realize how easy it actually was, and you can set a new goal.

2. Sell Unnecessary Stuff

You can easily earn some extra money by selling things that are just collecting dust. Most people have extra clothes, old video games, electronics, or a bike that hasn’t been rode in years. Rather than waiting until you are actually in a cash crisis situation and feel forced to take whatever you can get at the time, try to sell this stuff now for a better price. There are many online outlets such as eBay, Craigslist, or Facebook Marketplace, and there are also offline options such as garage sales and consignment shops.

3. Choose Free or Used Instead of Brand New

Before making new purchases for things such as furniture, clothing, or anything else you might find at a resale shop, look for used alternatives.

You can take advantage of other people’s wastefulness by purchasing their relatively new items from thrift stores and consignment shops, as well as Craigslist or eBay. You can also check out the Freecycle Network or the Craigslist free section. While driving around, you could also keep an eye out for decent items people are giving away for free. You could re-purpose them, or even sell them. Garage sales are another great place to find good quality used goods.

4. Cut Your Grocery Budget

Most of us spend more than we need to on food. By purchasing healthy foods, especially ones that are on sale, we can save some extra cash. By avoiding the convenience foods, such as frozen dinners, chips, sugary snacks, and other non-nutritious treats, we can cut expenses as well as our weight and health problems.

5. Stop Eating Out

If you think it doesn’t cost much to grab lunch at a fast food restaurant or a cup of coffee from Starbucks on a daily basis, then you are wrong. These expenses add up quickly and slow your progress toward your goal.

Home cooked meals not only taste better than restaurant food, but they will also be cheaper. It is easy to make a little extra to bring for lunch the next day at work, saving you from the temptation of a fast food meal.

If you are a coffee drinker, then it is easy to get a reusable coffee cup and make it at home. While it may not seem like much at the time, a daily stop at Starbucks, even if you only get a plain coffee for around $2.00 a cup plus tax, will cost over $40 a month if you go 5 days a week. That adds up to over $500 a year, and most of it could be easily eliminated by brewing your own coffee at home, or simply eliminating it from your diet. You can more than double those numbers if you consume fancy espresso drinks.

6. Cut Your Utility Bills

There are a few easy ways to save money on your utilities. Be conscious of how much water is wasted during a normal shower. It is simple to turn off the water at times during your shower. Some showerheads have a drastically reduced flow option you can use while soaping up or whenever appropriate.

Increasing the temperature on your A/C can make a huge impact during the summer. In the winter, you can lower the temperature on the heater. 78 degrees during the summer and 68 degrees during the winter is a good standard to go with during the daytime. These changes will hardly be noticed and your body will quickly adapt to the new temperature settings as your savings grows.

Getting rid of cable or satellite TV is another option. TV shows waste your money and your time. If you don’t want to completely ditch cable, then you could at least cancel premium channels. Basic cable packages have plenty of viewing options. Also, Netflix, Amazon Prime Video, and Hulu are cheaper alternatives.

7. Get a Second Job

While working a second job is not ideal, it is preferable to being financially unprepared in an emergency. Remember that is does not have to be a permanent thing. A second job can simply be used to raise funds in order to meet the goal you set in step #1 above. There are many part-time options in the restaurant and retail industries, as well as at gas stations and night time janitorial positions. You can also participate in the “gig economy” by spending some free time driving with Uber/Lyft, making deliveries with Postmates, or completing one-time jobs with TaskRabbit.

8. Work From Home

Maybe getting a second job is not your cup of tea. There are still many work from home options that allow much more flexibility than a traditional job.

There are websites that will pay you to do surveys, and there are also businesses that look for work from home people to do transcription and translation services. If you are a parent that stays at home with a child, then you could consider babysitting other kids as well. If you have artistic abilities, then you could create things to sell online. As you come across good deals at thrift stores and garage sales, look into reselling the items at a higher price elsewhere. Use the extra space you made in your home from step #2 to store the products for resale!

9. Save your Overtime Pay

If you have a job that allows overtime work, put aside a portion of that toward your goal. If you are able to save all of the extra overtime pay, then that is great. If you feel the need to treat yourself to something nice because you worked 60 hours instead of 40 last week, then that might be better – depending on the person. Getting burned out to the point that you are no longer willing to work overtime could be counter-productive to reaching your goals.


Now that you know some simple ways to build an emergency fund and save for the future, it is time to make a plan and set it in motion. Stop making excuses, your future self will thank you.