50 Ways to build an emergency fund. Tips, tricks and strategies on saving more for emergencies and where to keep your rainy day money.
There’s a reason Dave Ramsey’s famous Baby Step #1 is to build an emergency fund. It helps people get on track for becoming financially independent.
I don’t agree with everything Ramsey says. But having at least a small emergency fund to begin with can be helpful. A basic emergency fund is a place where you keep cash for true emergencies, such as job loss or a broken-down car that would prevent you from going to work.
Ultimately, you’ll want enough cash in your emergency fund to cover all of your necessary expenses for a 3 to 6 month period. But any amount of money saved is a start.
Beyond the basics, I suggest at least five separate components to a complete emergency plan. Getting to that point presents challenges for many people. When you’re starting out, it can be difficult to assemble even the basics for eventual financial freedom.
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But even if you’re hard-pressed for cash, you can still start an emergency fund. Here are fifty different ways to start saving today:
- Open a high-yield online savings account with as little as one dollar. This gives you somewhere to put your emergency funds, which is essential. And you might as well protect against inflation while you’re at it.
- Sign up for direct deposit. When you do, have part of your paycheck–as little as a few bucks–deposited right into your new online savings account. You won’t spend it if it doesn’t hit your checking account in the first place!
- Empty your pocket change into a jar every night. Then, put the change into your savings account every couple of months. Don’t spend much in cash? Try an app like Acorns that automatically rounds up your transactions to save your virtual change for you.
- Add to your jar every time you swear. Trying to break a bad habit? Tax yourself every time you do it. You’ll break your habit more quickly and save money while you’re at it.
- Have a garage sale. Selling off things you no longer want or need can get you started on the road to saving. Plus, it’s nice to de-clutter the house once in a while!
- Sell on Craigslist or Facebook groups. Bigger-ticket items may net a better price sold individually on Craigslist or your local Facebook garage sale group.
- Whenever you purchase groceries with a coupon, deposit your savings into the bank. This works especially well if you aren’t already in the habit of using coupons. Whenever you cut a few bucks off of your typical grocery bill, save the extra. You’ll never even miss it.
- Downgrade your cell phone or cable service. The best ways to save are options that let you keep saving money, month after month. Just be sure you put the money saved into your emergency fund every month!
- Bring your own lunch to the office. Say you typically spend $10 for lunch at work, but you can make a salad at home for $2.50. Every day you bring your lunch to work, put $7.50 into your emergency fund.
- Ask for a raise. Pull together your work performance stats for the past year or two. Then, get together with your supervisor, and lobby for a raise.
- Save your raise. If you do get a raise, don’t let lifestyle inflation eat it all up. Instead, have it automatically deposited to your savings account rather than your checking account.
- Drink soda rather than alcohol when you’re dining out. Buying even one drink at dinner can set you back $5 or more. Every time you downgrade your drink, throw the money you’ve saved into your emergency fund.
- Switch to store-brand food items. Get a feel for how much this cuts from your weekly grocery budget. Then save the extra cash.
- Switch to generic medication. Many times, doctors don’t mention generics, but you can switch to them if you ask. Again, keep track of how much you’ve saved, and add it to your bank account.
- Cut back or eliminate your addiction to smoking. Smoking has up-front costs, of course. But you’ll also save money on healthcare over time if you quit.
- Be aware of your ECRD Factor. What are you spending money on that you could eliminate or cut back on? Find those areas, and then leverage them to save more money.
- Start a side gig. Whatever your side gig, put any profit from it directly into your savings account.
- Use a cash back rewards credit card. Instead of putting the rewards towards extra spending, put them into your savings account.
- Save gas by not driving faster than 65 miles per hour. You can also save gas and be easier on your car by not braking too hard and by following other safe driving practices.
- Stop using credit cards if you pay interest. If you have trouble not carrying a balance, just stop using your credit cards.
- Cancel your Netflix subscription. Actually, look at all of the subscriptions you’re charged for monthly or annually–Netflix, Hulu, Amazon Prime, Spotify, etc. If you don’t use them enough to justify the costs, just cancel them.
- Do your own yard work. If you’re currently paying someone to do your yard work, start doing it yourself. You’ll get a workout and save some money.
- Visit the library rather than your local bookstore. Bookstores are great. But you can save so much money on reading material by renting it from the local library!
- Stock up on non-perishable groceries when they are on sale. Having a well-stocked pantry is essential to keeping your grocery spending lean. Get familiar with your local stores’ sales cycles, and stock up when you can.
- Cancel magazine subscriptions. If you have some must-read magazines, subscribing is better than paying more at the newsstand. But if you’re not reading those magazines cover to cover every month, cancel them.
- Reuse or repair things instead of replacing them. Then, take the money that you saved by not purchasing new, and put it into your savings account.
- Delay vacations until your emergency fund is complete. This is a tough one. But you should have at least some part of your emergency fund saved before leaving on vacation.
- Sign up for online bill payment if your bank offers the service for free. This will keep you from missing bills and paying late fees.
- Shop around to ensure all your your financial accounts do not charge you extraneous fees. In this day and age, you shouldn’t pay for the privilege of using a checking or savings account!
- Always know how much you have in the bank so your accounts will never be overdrawn. Money management and budgeting apps are a great option for helping your manage this.
- Use public transportation rather than driving when possible. Alternatively, consider biking to work.
- Work a few extra hours at your day job. If you’re paid hourly, you can earn extra to put into savings. If you’re salaried, impressing the bosses could net you a raise sooner rather than later.
- Call your insurance provider and ask for an updated quote. In face, you should shop around for insurance once a year. You never know when you’ll get a better offer!
- Crawl the web for abandoned and unclaimed property owed to you. You never know what you’ll find. Put any unclaimed cash straight into savings.
- If you travel, join AAA; the discounts will often pay for the membership fee.
- Cancel your gym membership. You can get a great workout at home with some free weights. And you can always get your cardio in by walking or running outdoors.
- Consider refinancing your mortgage. If you haven’t taken advantage of low interest rates, now is the time. You could save hundreds per month, depending on your circumstances.
- Cook and brew coffee at home. Cutting out a latte a day may not make you a millionaire. But cooking and brewing your coffee at home can save you a few bucks a day.
- Find opportunities for one-time income. Don’t have time for an ongoing side gig? Consider doing one-time income-earning opportunities like babysitting or house sitting.
- Check out your memberships. Are you a member of a professional club you don’t get much use out of? A local country club? Consider cutting out memberships that don’t really benefit you.
- Save your tax refund. In fact, you can have your tax refund direct deposited to your savings account.
- Adjust your withholding. Don’t want to wait until tax time to beef up your emergency fund? If you always get a refund, you could be having too much withheld from your paycheck. Talk to your HR department about adjusting your withholding. Then, put that extra cash from your paycheck right to your emergency fund.
- Stop eating out. Commit to only eating out for truly special occasions, such as birthdays. You’ll be surprised how much this could save over the course of a year.
- Consider a no-spend month. This Pinteresty trend is actually a great way to save money. You basically eliminate all but your essential spending for a full month. It can be an eye opening way to cut unnecessary spending long-term, too.
- Keep track of all of your spending. Sometimes you spend money without actually realizing it. Keeping track of all your spending, either with an app or by writing it all down, can help you pinpoint where you’re over-spending.
- Negotiate on everything. Whether it’s a retail store or your cable company, pretty much everything is negotiable.
- Share your home. Getting a roommate can really boost your savings. Or you can use Airbnb or VRBO to rent part or all of your house part-time.
- Save on energy. Take steps to make your home more energy efficient, and it’ll save you money month after month.
- Shop secondhand. Sometimes, you just have to buy stuff, whether it’s new cups to replace the ones your kids broke or a new pair of jeans. But these things don’t have to be brand new. Try shopping at online secondhand stores or your local Goodwill to save some serious cash.
- Celebrate milestones. Saving three to six months’ worth of expenses can take a while. So set some milestones–like your first $500 or $1,000–worth celebrating. (Just don’t blow a bunch of money on a fancy dinner out while you’re at it!)
With a goal to be financially independent, the first step is securing a cash cushion, accessible in emergencies. During this funding phase, it may be beneficial to make sacrifices that in other situations you would not make. A slight decrease in quality of life in the short term will likely outweigh long-term financial devastation when a future emergency arises.
Original published on April 14, 2008, this article was updated by the Consumerism Commentary editorial team (five of us to be precise) on November 15, 2017.
Published or updated November 14, 2017.