How to Build an Emergency Fund

If you are like most people, you don’t have a substantial emergency fund. What constitutes as an emergency fund? Great question. An emergency fund is a runway of at least 3 months of your salary – the more the better. The hard part for most people is starting and consistently adding to that fund. With bills and unexpected costs, it can be even more difficult. The list below provides some tips and tricks on how to start and maintain an emergency fund for when life throws curveballs at you.


Create an effective budget for yourself. This will allow you to see where you are overspending. Additionally, sticking to that budget gives you an opportunity to take the money you were previously overspending and put it towards your emergency fund. You may also decide to sacrifice some things, like eating out, in order to stick to your budget. This can be hard at first, but you will start to become adjusted to the new budget and lifestyle that comes with it.

Decide Where to Keep the Money

You will need to have a place to store your money that is easily accessible in the event of an emergency. Creating a separate checking account can be a great way to have access to the money in a quick way. Having the additional account also makes it easier because there is no mixed money. That account is solely for emergencies.

Use it for Emergencies Only!

This will take a bit of discipline, but your emergency account is for…emergencies! What counts as reason to withdraw from your new account? There are quite a few instances where your emergency fund is appropriate to draw from. Here are a few examples:

  • Major car repairs
  • Sudden loss of job
  • Medical bills
  • Home repair

These are all instances where having a cushion of money will be extremely beneficial.

Automatic Payments

Treat your emergency savings account like one of your monthly bills. Set up automatic payments and stick to them! Knowing that your budgeted amount will end up in your account every month will be an excellent piece of mind. Plus, you can always make additional deposits if you end up under budget – and that’s a bonus!

Set Goals

Set goals for yourself. Things like “after x months I want to have x amount saved.” Goals are incredible ways of keeping you accountable to yourself and also marks your progress. When you hit your goals, make sure to give yourself a small reward. You earned it!