15 Tips to Grow the All-Important Emergency Fund

In many of the articles that you will find here on DebtHelp.com, a constant suggestion (or command, rather) that you will hear is to keep an emergency fund for the good of your finances. Having such a fund might be your only method of keeping out of debt, or of keeping your debt manageable.

Your emergency fund may be held in any account that you feel comfortable with and that allows you to withdraw money with little notice, but ideally it also will contribute some interest earnings to your balance. Most people choose traditional savings accounts for their emergency funds. Whatever you choose, consider the following ideas to make your emergency fund strong and useful:

1. Your goal should be to save at least three months’ salary for your emergency fund., but if you have dependents it definitely should more.

2. Pay off as many of your “bad” debts, such as credit card debt, as possible. It often is difficult to decide between saving and paying back debt, so ideally you should take care of the one to free up more money for the other.

3. Naturally, it goes without saying that you have a budget. (Right??) As you stick to your budget, you have a nice opportunity to save little bits at a time. For example, suppose you allow yourself $50 per week for entertainment. If you see a movie for $8, count it as $10 instead. You will hardly notice the difference, but small savings such as this add up quickly.

4. Consider what may happen to your debt situation if you fail to develop an emergency fund. If you have had difficulty saving money thus far, it may be because you have been using your money to pay debts. What will happen if an emergency arises? You probably will have to use credit to pay for it, thus putting yourself in more debt. Paying off debt is necessary, but try to save at least a little bit each month nonetheless.

5. Pay with cash. Not only will this probably cause you to spend less money, but you also can make it a point to set aside change from your transactions to save. It might seem like saving so little at a time could not possibly add up to big savings, but you likely will be convinced after you try for a while.


6. Look into assets of your past. Is it possible that you have an old certificate of deposit (CD) or savings bond that you have forgotten about? If you have not even remembered it up until this point, then surely you will not miss it when you put it into your emergency fund.

7. You may already have heard the advice to “pay yourself first”, and in no situation is this more true than when it comes to emergency funds. When you pay your bills each month, pay your bill to yourself (to your emergency fund) as well.

8. Do you have an expensive habit? Daily fancy coffee drinks anyone? Think about how much you could save.

9. Attach the account that you will use for your emergency fund to your primary bank account, and set up automatic transfers each month. It couldn’t be easier to remember.

10. If discipline is not your best asset, then you may be able to have a bit of money each month deducted from your paycheck and placed into an account before you even see it.

11. Another tip for those who find discipline difficult: you could limit your ability to withdraw money from your account. Of course, the whole point of an emergency fund is that it is available to you in an emergency, so consider allowing your spouse or another family member full access to the account just in case.

12. Clear out the clutter and have a garage sale. All of the earnings can go to start the building your emergency fund.

13. When you spend less than expected, save the remainder in your emergency fund. Say your electricity bill is less some month than it is normally. Immediately set aside the leftover money for your emergency fund. This tip applies also to larger amounts such as bonuses at work or gifts of money. Not the most fun thing to do with newly acquired cash, but it really is a great idea if your fund needs to be built up.

14. You might consider asking family or a friend to lend to you a bit of money to start your emergency fund.

15. If you are just about to finish paying off a debt for which you have been making monthly payments, then continue to pay the same amount each month into your emergency fund until it is built up sufficiently. Surely, if you already have been setting aside a certain amount for a debt each month you can continue to afford to do so.