7 Ways to Build an Emergency Fund

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A woman creates an emergency fund on her laptop

No one likes planning for life’s rainy days. It’s uncomfortable enough just thinking about the potential storms on the horizon, and planning for them means acknowledging that times won’t always be bright and sunny. But, putting away a little money for an emergency can help you see the silver lining when life’s storms start raging. Here are seven of the best ways to build an emergency fund.

1. Cut back on dining out

In order to set money aside for an emergency, you may have to cut back in other areas of your life. If you’re like most people, the biggest area of improvement on your monthly budget revolves around your eating habits. Sure, eating out is convenient and fun, but it can also be incredibly expensive. By planning out your meals, preparing your own food and even bringing a brown bag lunch to work, you can save a lot of money. Even if you cut back on eating out just a few times per month, you can save a decent amount of money that you could put into a savings or emergency fund for your future rainy days.

2. Take a wait-and-see approach on expensive items

One of the biggest reasons people fail to fund an emergency account is because the money has already gone toward other expenses. And, in the same vein as eating out, expensive discretionary purchases are often to blame. Instead of planning for uncomfortable times ahead, it’s easier to spend money on things that will bring pleasure now. It’s human nature.  So, instead of always buying impulse items right away, consider implementing a 30-day wait-and-see approach. This means thinking about your potential purchase for at least 30 days before making the transaction. Then you can decide if the purchase is really necessary. You may often decide you didn’t really need that item in the first place, which will save you money.  This waiting period will help you weed out any unnecessary purchases, so you can put some money away for an emergency.

3. Find a savings app

These days, you can practically run your entire life from your phone. And, saving for an emergency is no different. Start by looking for apps from your favorite stores. Many large retailers have apps that can save you money on things you already purchase anyway. Other savings apps make it easy to find coupons and rebates, and even track your spending to remind you when you’re over budget. These apps can offer easy ways to set aside a few dollars every month for an emergency. However, be sure to avoid talking yourself into buying discretionary items you don’t need. It’s easy to justify unnecessary purchases, especially when there’s a great deal staring you in the face.

4. Review previous unexpected expenses

Now that you’ve cut back on unnecessary expenses and saved a little money along the way, it’s time to plan for the unexpected. To start, view your bank statements for the past year and calculate how much you’ve spent on emergencies. These can include unexpected car repairs, doctor’s visits, or emergency out-of-town trips. Reviewing these will give you a good idea of what to plan for moving forward. Of course, you can’t always predict every emergency that will pop up, but this will give you a reasonable starting point.

5. Set savings goals

Take the information you’ve learned from reviewing your past emergencies and use it to set savings goals. Target your goal in dollar amounts. For example, starting with $1,000 in your emergency fund will cover most expenses. Then, based on your research, decide how much you can set aside every month to cover unexpected costs throughout the year.   


A woman creates an emergency fund on her laptop

6. Find a secure home for your savings

If you don’t already have a savings account, open one. Placing your money in a separate account is a great way to tell yourself that certain money is off limits. You could even open up a separate savings account for your emergency money.  Doing so can help you avoid the temptation to dip into your savings for non-emergency purchases.

7. Fund emergencies (and savings) first

With so much of your money spoken for (in the form of bills, rent, mortgage, and more) even before your paycheck comes in, it might seem counterintuitive to live by the policy of paying yourself first. But, the best way to afford your emergency purchases is to fund your savings and emergency accounts before anything else. Plus, doing so will help you avoid those unnecessary purchases down the line. If your employer offers direct deposit, use it to allocate a certain amount toward savings and emergency right away.


Emergency expenses have a way of throwing a wrench in your financial planning that can be difficult to overcome. So, when it comes to planning and saving for the unexpected, it’s always better to be safe than sorry. Even if you can’t always avoid life’s little mishaps, planning (and saving) for them can give you peace of mind now and help you get back on your financial feet in the future.