Money Saving Tips

How to Build an Emergency Fund

How to Build an Emergency Fund
Written by Irina Vasilescu

When unexpected expenses suddenly crop up, it helps to have an emergency fund to fall back on. The only alternative is to borrow money to cover the crisis, but we all know that credit costs money. On the other hand, if we have savings salted away, we earn a little interest – way better than covering financing charges for a loan.

But saving for a rainy day is easier said than done. Our expenses always seem to be one step ahead of our budgets. All the same, if we don’t want to end up in an awkward position when life throws us a curve-ball, we need to get saving. Check out these tips and tricks.

Have a reachable goal

If we fail to plan, we plan to fail, so your first step is to decide how much you’re going to salt away. Start with an easily reachable target – say $250 or $500 saved over a period you’re comfortable with. Having any money to put away in savings might sound like a challenge, but if you can save just $25 a week on your regular expenses, you’ll reach the $500 mark in 5 months. Ultimately, you want to have a couple of months’ worth of living expenses saved up, but starting by saving small is better than not starting at all!

Setting a goal means budgeting, so if you haven’t started budgeting yet, use a spending book to record where your money goes. Now you can eliminate unnecessary expenses and prepare a budget that includes the amount you want to save every month.

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Limit the temptation to spend your savings

If your savings money is in your day-to-day bank account, you will be very tempted to spend it when things get a bit tight or even when you just want to spoil yourself a little. Open a separate account for your savings, but beware of accounts that require several days’ notice before you can access your money. Emergencies tend to happen when we least expect them, and when they do, we need to get at our money fast.

Automate your savings payments

Waiting to see what amount of money you have left over at the end of the month won’t work for most of us. So once you’ve worked out what you can spare and how you’ll adjust your spending habits to save that much, make a firm commitment by automating your payments to your emergency fund.

Supplement your fund with small change

Ask everyone in your family to collect their change once a week and pop it into a jar or piggy-bank. This might sound like small beans, but over time, it adds up. Empty the jar every month and deposit the money into your emergency savings account. If everyone in your family contributes, you might be surprised to at how much it helps.

For example, if you are saving $25 a week and your family collects $25 in change during the month, that’s an extra 25% into your emergency fund – not to be sneezed at!

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Go moonlighting

Daily show host Jon Stewart has always held down two jobs. He lived off the earnings from one and saved up the money he earned in the second. At one point, he worked at a car dealership and had a second job at McDonald’s. A little waiter work, admin work for a friend’s business, or a ‘private job’ that uses your skills can go a long way towards boosting your emergency fund.

Use every money-saving trick in the book

Pay us a visit regularly! This way we’ll give you more savings tips than you can shake a stick at. A penny saved, as the saying goes, is a penny earned. If you can slash your household budget by using freebies, cutting coupons, DIY-ing and more, all the savings can go into your emergency fund. Don’t worry, you won’t be reduced to starvation and third world discomfort – we believe in saving and living the good life!

Treat yourself when you reach your milestones

Regularly pinching your pennies can get frustrating. But if you know you’re working towards a goal, and that you’ll have earned a treat when you reach it, you’ll feel that you’re working towards something more tangible than spare money for an emergency fund. Decide on a treat that you and your family will really love, and set a goal that has to be reached before you can get the dominant outing. It’s a great way of keeping everyone motivated.

Grow until you can have two emergency funds

You can usually get more interest on money that isn’t immediately available to you. As your savings grow, you can look at opening a second account that pays better returns but where you need to give notice to access funds. Now you’re on your way to having the ‘several months of living expenses’ saving that experts say you should have.

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How to Build an Emergency Fund

About the author

Irina Vasilescu

Irina Vasilescu is our money-saving and DIY expert and also the editor-in-chief as she's always on the lookout for the latest online deals.


  • These are really good tips especially for people who may have such a hard time with saving to begin with. Sometimes it can be hard being frugal even I will admit that. Right now to work on my emergency fun I am mostly saving my change in a can. I hope to soon start putting away small amounts though in my saving account $20 to $30 a month even.

  • It’s a good idea to make automatic payments into your savings, and this is something that has worked well for me in the past when I have been trying to save up for something. I put a certain amount of my wages at the beginning of each month into my savings, and then if I have anything left at the end of the month I will add those, too, and I find that this is what works well for me.

  • My philosophy has always been to pay myself first. Since I’ve worked for myself more than working for other people, I’m stickler for this. After I pay myself, I handle all other expenses and whatever is left over at the end of the month, I put away in savings too. I set monthly goals for myself and most definitely treat myself too. I think what really gets a lot of people off track when it comes to saving is, they just focus on trying to save and sometimes they don’t stop to reward themselves for their accomplishments.

    • I also share the same philosophy. Paying bills and fundamental expenses (e.g. food, hygiene) always comes first, no matter what, but managing what is left is defintely the hardest part for me: impulsive purchases have always plagued my life, and I usually end up with no money to save at the end of the month. I’ll try to force myself to follow stricter rules (hopefully the tips in the article will help).

  • It is very hard for me to start saving money. Sometimes, I need a lot of money very quick, and then, my boyfriend and me make a piggybank (DIY of course), and try very hard to collect the whole amount in short time. I was thinking about the idea of saving money for the summer holidays, and don’t find it too hard after reading these instructions. I think that it’s not impossible, with all those people doing it, and having a plan. Thank you for the useful information.

  • I have £200 a month that leaves my account on the day I get paid, it goes into a savings account with a different bank. I try not to dip into it at all, though sometimes I have to, but if so, I take out the minimum I need to get me through to the end of the month, which generally means that something is retained in my savings account every month, even if it’s not entire £200.

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