15 budgeting tips for building an emergency fund

Josh Smith

An emergency fund is an important asset that you will hopefully never have to use. What some perceive as a frivolous expense is really a key part of planning for the future. Any number of unwelcome occurrences could prompt withdrawal from an emergency account — from medical bills to a broken refrigerator.

For anyone other than the chronically frugal, it might seem counterintuitive to save money and hope to never use it, but isn’t it better to have an emergency account collect dust than be surprised by a large, unpayable bill? Expect the unexpected, and build your emergency fund, with these 15 easy budgeting tips.

Collect change

Make a change in your budgeting habits and start penny-pinching. What might seem like an inconsequential penny here, or an insignificant dime there, are actually missed opportunities to build an emergency fund.

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Shave the paycheck

Most of us don’t have the luxury of siphoning paycheck funds to an emergency account, but saving for a catastrophe can be cheaper than you might expect. Consider this: if you save $20 a week — the cost of a modest meal out — you would save over $1,000 in a year. For the low, low price of two burritos a week, you could save yourself from potential financial catastrophe.

Eat at home

The average meal out costs around $12, whereas the cost of a meal at home, designed to feed multiple people or one person multiple times, averages around $2. While eating out might be more convenient or fun, you stand to deposit $10 a meal into an emergency account by merely honing your cooking chops.

Get a side gig

It has never been easier to earn supplemental income. According to CNN Money, over 44 million Americans have some sort of side hustle. If you have a skill there is probably a way to profit off it. Whether you freelance write, ad-hoc design or drive for rideshare, chances are there is a way to bankroll savings outside of a 9-to-5 structure.

Save tax refunds

Tax season is upon us, which for many means upwards of $1,000 in tax refunds. It’s natural to receive this check and see dollar signs, but fight back and think about depositing your tax return into a savings account. Responsible budgeting isn’t always fun, but you will thank yourself later in the event of an emergency.

Reduce monthly expenses

At one point, the dog toy subscription service seemed like a good idea. In hindsight, strapped for cash and newly lucid, some of your monthly subscription services might seem frivolous. Review your subscriptions and cut back where you can by deciding what you can easily live without.

Automate savings

Set up your finances so funds are automatically deducted from your paycheck and deposited into a separate account. As long as money is being stashed away in a savings account, Roth IRA, etc. it will be out of sight, out of mind, and could potentially save you in case of an emergency.

Deposit dividends

Think about including some dividends stocks in your portfolio. While you could pocket dividends and go on a cruise, the far more responsible use of added cash would be to deposit it into an emergency fund. Filling an account with dividends isn’t the fastest way of saving money, but the extra income certainly adds up.

Repair credit

If your credit report leaves a lot to be desired, it might be time to get a little help. An unimpressive credit score leeches your bank account in more ways than one: high interest rates, loan denial and subpar credit cards all cost consumers in the long term. Seek out credit repair to improve your FICO score, save money on lending, and squirrel away the extra cash for a rainy day fund.

Sell your car 

No-car households are at an all-time high for a reason. The cost of car payments, maintenance, insurance, gas and other auto expenses make owning a car nearly impossible. City folk can easily take their esca-legs around town, but rural citizens have it a little harder. Luckily, in the age of ridesharing, it has never been easier to go car-less.


Itching for some vacation, but reluctant to break into the piggy bank? Consider some affordable indulgence with a staycation — a vacation near your home. Experience all the luxury of a vacation without the cost of travel. Some people go as far as booking a hotel within driving distance of their homes just to emulate the feeling of a vacation.

Cut the cord

Most people spend around $103 a month on cable. This doesn’t even include the various streaming services most people subscribe to. Thanks to the robust back catalog and great original content from streaming services, there is less reason than ever to keep cable. Think about using al-la-carte entertainment, pick the streaming services you want, and ditch the rest.

Skip the coffee shop

Your morning coffee might seem like a necessity, but it might be time to say adios to the artisan Americano and hello to the humble homemade heavy-roast. The couple dollars, sometimes as much as $6, you spend on drinks at the coffee shop add up, and these funds would be better delegated to an emergency account.

Supplement with low-risk investments

If you’re playing the long game, invest in some low-risk investments such as CDs or high-rated bonds. While these investments won’t return much money in interest, holdings such as bonds take years, maybe even decades to mature, so they provide guaranteed income for the future that can’t be touched on a whim.

Liquid assets

In theory, investing in an emergency fund for the future makes sense, but it does you no good if unexpected costs occur today. It’s a good idea to keep some money in liquid assets such as a savings account or cold, hard, cash. While something like a CD will return more on interest, there are significant financial penalties for withdrawing early, and therefore does you no good in the event of an emergency. Be sure to balance future income with liquid assets.

If you’ve been wondering about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades — plus you get two free credit scores updated each month.

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