Coin spilling from a jar.

How To Start An Emergency Fund

An emergency fund is a bank account set up specifically to cover unexpected, large expenses. Even if your finances are tight, it is possible to start building an emergency fund.
Designate a separate bank savings account to accumulate the funds. You can open a new account or designate a current savings account you may have, but are not using.

The key is to not use this account for anything other than emergencies. (Think home appliance repair, expensive car or home repair, emergency room visit, or unemployment.) It is not for vacation, a 4K TV, or BOGO shoe sale.
Ideally, you want 6 months worth of income in an emergency fund. If that is overwhelming, don’t let it deter you from starting. It takes time.

Set small goals like saving two weeks worth of income, then one month, two months, and go from there. Celebrate every time you achieve the next level. (Dance parties, a loud “Woooohooo”, and calling your best friend to share the good news are fun, inexpensive ways to celebrate.)

Use this free emergency savings calculator to start your plan.
Review your monthly budget and determine how much you can realistically set aside each pay period. If it is $5, then start there. Increase it as you can. Have these funds automatically transferred. You are less likely to forget to move or spent the funds this way.
Get creative.

  • Deposit any loose coin you may have stored in jars.
  • Transfer a portion of your tax refund.
  • Review your checking account each time your payroll is deposited. Do you have left over money from your previous payroll? Transfer it to your emergency fund.
  • Consider a spending freeze. If you are stocked up on groceries and other necessities, start a two-week spending freeze. While you may still need to buy fuel for your vehicle, cease all other spending - eating out, in app purchases, movie rentals outside your subscription services, and online purchases. Take the money you have at the end of those two weeks and transfer it the fund.
  • Sell unused items. Facebook Marketplace, Ebay, Poshmark, and other online tools make it easy to sell items you no longer need. $5-$10 may not seem like much for items sold, but those little amounts add up fast when you are depositing them to your account.
  • Other ideas include changing your cell plan, consolidating debt, or working a seasonal second job.