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How To Start Building An Emergency Fund & Build Your Savings

How To Start Building An Emergency Fund & Build Your Savings
Adrienne Romer-Jordan Nov 13, 2019
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When I got my first job at sixteen, my dad advised me to put some of my paycheck into my savings account for emergencies. 

Sixteen year old me ignored this advice and blew through the meager paychecks as only a teen can. 

Today, thankfully, I am a lot smarter about putting money aside as a rainy day fund. In general, your emergency fund should be able to cover the cost of three months worth of living expenses. 

I treat my emergency fund as strictly cash I can use to bail me out of a bind. You never know what life is going to throw your way. Unexpected medical bills, car maintenance or home repairs, can all happen suddenly. 

To handle the unexpected, it helps to have some cash set aside for those “just in case” moments. 

Below I’ve identified a few ways you can start building an emergency fund that will leave you prepared to face any financial hardships that come your way. 

1. Pay Off Your Debt

It wouldn’t be right to talk about building an emergency fund without first addressing your debt. 

If you have high amounts of debt, you should be actively working to pay that off. It can be hard to reach your financial savings goals when you feel like your debt is draining your bank account each month.

When your debts are high, you should set a small emergency fund goal that will help you if you run into a bind. Once you’ve set aside this money, all other extra income should go toward paying off your debt. 

Once your debt has been decreased to a fairly low or zero amount, then you can start putting that extra cash away in your emergency fund. 

The best way to start off on the right financial path is to be debt free and to have a decent amount of savings set aside to cover you in the event of an emergency. 

2. Define Your Emergency fund

Financial advisors will tell you that your emergency fund should cover 3 to 6 months of your expenses in the event you lose your job or need medical care.

But that kind of mega savings can be a huge endeavor for a lot of people. Instead of focusing on the bigger picture right away, I believe it is best to start small.

You could challenge yourself to save $1,000 in three months. Once you’ve met that goal, challenge yourself to save another $1,000 in half the time.

Everyone’s emergency fund will be different. For some, their monthly expenses could total $1,500. For others that number could be $3,000.

How much you save is directly determined by how much money you need to spend each month in order to maintain your lifestyle…or to at least keep a roof over your head and food in your stomach. 

My advice is to ignore that three month’s rule initially and set a smaller goal that you can reach in a short amount of time. 

3. Start Saving

The best way to start saving is to set it up so that it happens automatically. If you get direct deposit from your employer, have about 15% – 20% of each paycheck directly deposited into your savings account.

Since it is automatic, you won’t have to worry about transferring funds later, or you won’t be tempted to not transfer funds.

If you aren’t sure if you can commit to saving 15-20% of each paycheck, you should create a monthly budget to track your expenses. Mint is a great app to use that will take care of the budget tracking for you.

By knowing how much money is coming in and out, you can determine what you can reasonably save and still have a little cash for some fun. 

Another app that could be helpful is Digit. The Digit app will analyze your spending and automatically save the perfect amount for you. 

4. Put Your Savings In The Right Place

If your savings account isn’t a high-yield savings account, then it is not benefiting you very much.

A high-yield savings account is an account that is earning you interest on the money you stash in there. Most standard savings account will net you 0.10 APY or less. 

High-yield savings accounts generally net you 2.2% to 2.5% APY. This higher percentage will help you grow your savings faster. 

If you do decide to open a high-yield savings account, make sure it is one that doesn’t require a specific amount deposited in order to open the account. 

Also take note of the withdrawal options and how accessible your money will be when you need it most.

5. Don’t Touch Your Savings

Once you start setting money aside, you need to remind yourself not to touch that cash. 

I like to keep my emergency savings in a different bank than the one I use regularly for my checking account.

Keeping them separate means I’m never tempted to transfer funds from my savings account to my checking account. It also keeps the cash out of site, so I can almost forget I even have it. 

If you do decide to open a separate bank account for savings, make sure you can easily get to your money if you need to. It is for emergencies after all. 

Again, choose a bank that has a high-yield savings account option. This way you can earn interest on the money you put in there. 

6. Keep Your Spare Change or Invest It

Are you one of those people that say “keep the change” after making a purchase. I admit I do this a lot simply because I don’t like how heavy coins make my wallet.

Now I’m making an effort to keep all my spare change so that I can either turn it into my bank or throw into a CoinStar for a gift card.

When you are on the go, one great way to hold on to your spare change is to keep a change jar in your car. Any coins that come your way just throw in there until the jar gets full. Then deposit that cash or swap out for a new jar.

For those that rarely pay anything with cash, you can start saving your spare change by investing it instead. 

Acorns is an app that lets you link your debit or credit card. After you make a purchase, Acorns will round up to the nearest dollar and invest that spare change into a portfolio for you. 

It only costs $1 per month to maintain and to get you started they offer a $5 sign-up bonus. You can read our review here.

7. Supplement Your Income

For some of you, your day job may not pay you enough to set money aside for savings. If that is the case, then you should consider picking up some side jobs.

I like side jobs that leave the hours you work flexible so that your day job isn’t compromised. 

There are several different ways you can go about supplementing your income, but I’ll list my top three favorite ways to earn cash.


A side hustle will let you work random, odd jobs of your choosing. The work is flexible and the pay pretty decent, depending on what you do. Some great side hustles include:


I like surveys because you don’t have to physically go anywhere to do them. Most of them can be done using just your computer or smartphone. 

While you won’t get rich taking surveys, it is an excellent way to make passive income that you can throw into your savings account. Some of my favorite survey sites are:

Some of these survey sites, like Swagbucks and MyPoints, offer additional ways to earn points/cash. You could watch videos, read a few emails, or take a poll. 

Sell Stuff

If picking up a second job or taking surveys aren’t your thing, you can always try selling some of your things. 

I primarily sell clothing and shoes through different sites, but you can also sell things like kitchen appliances, yard tools and even a car if you have one to get rid of.

Take a minute to go through your home, garage and even your parent’s house to see what you could make a profit off of. There are probably loads of items not being used that would bring in some extra money. 

 Some great sites to sell on are:

A majority of these sites leave the selling details up to you. You will define the item, price and method of delivery. With the except of eBay and Etsy, you shouldn’t have to deal with any fees either. 

My favorite part of selling through these different websites and apps is that for many of them it means cash directly in hand. This way you don’t have to bother with a PayPal account or any bank transfers.

You can take that cash and deposit into your bank immediately, or wait until your cash jar grows a little and make one large deposit. 

8. Cut Expenses

After picking up a side hustle, you may still find it hard to really put a decent amount of cash away into your emergency fund.

At this point you really need to look at your finances and start cutting back everywhere that you can.

If you were grabbing coffee every morning on your commute to work, opt to make your coffee at home instead. Those prone to grabbing lunch on the go will need to start brown bagging it. 

Even if you think you are making all of the right choices, step back and take a clear picture of where your money is going. 

It could be a matter of tweaking your diet so groceries are cheaper or putting your car up for sale and taking public transportation. 

If there are certain things you splurge on regularly, like a blow out at the salon or pedicure every two weeks, consider giving these up. Or, if you can’t say no, opt to stretch out your appointments instead.

Also, don’t be afraid to think outside the box a little. Some additional  ways to cut expenses could include turning down the thermostat, taking shorter showers, and washing all laundry with cold water. 

Whatever the case, cutting your expenses will leave you with extra cash. This money should go straight into your emergency fund savings account. 

Final Thoughts

Everyone should work to have an emergency fund, even if that fund is as low as $500. That is cash that could really help you out one day.

You should always actively work on building your emergency stash. Once you reach your goals, you can either continue to save or choose to invest that extra cash in different ways. 

Trust me when I say that saving money becomes a natural process the more you do it. And you don’t need to stop at an emergency fund. 

You can also have a separate short-term savings account to cover something like a trip or holiday gifts. And you can have a long-term savings account to take care of things like a car or home down payment. 

In the end, saving is just the smart thing to do to secure a strong financial future.

Thanks for reading and I wish you success in all your savings goals. 

Adrienne Romer-Jordan

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