Published On: Mon, Feb 15th, 2016

6 Easy Ways to Build Your Emergency Fund

There’s nothing more terrifying than an emergency – especially one that costs you a fortune. Life doesn’t always go exactly as planned. Building an emergency fund is a perfect way to be prepared for whatever life may throw at you.

According to Investopedia, emergency funds help you “improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as credit cards, as a last resort.” As young people, starting your emergency fund as soon as possible will help pad yourself financially against future unexpected expenses. Such expenses can stem from the loss of a job, illness, a car accident, and more.

How Much Should You Save?

The general rule of thumb is to save three-to-six months worth of your income. However, this can vary depending on a number of factors. For example, during the economic recession, many experts recommended keeping nine months to one year’s worth of income on hand. That’s because jobs were sparse.

How much you save will depend on a dollar amount that makes you comfortable. If you have dependents, you may require more emergency dollars than someone who does not. The reliability of your vehicle, home, and other daily essentials may also impact just how much you should keep on hand. There’s no universal answer.

The first step you should take when starting an emergency fund is laying out your monthly expenses in a month where they are highest and basing the amount you save on that number.

Ways to Start Building Your Emergency Fundemergency fund piggy bank

Now that you know how much you want to save, it’s time to starting building your emergency fund. But how? Here are some quick, easy tips to jump start the process:

  1. A little at a time. When looking at three-to-six months worth of your income, the number can be pretty daunting. Where do you even start? Well, you start small. 10% of your paycheck doesn’t look like much, but it will add up over time. Choose an amount that’s reasonable based on your current expenses and begin putting that money away.
  2. Earn extra cash. There are several ways you can earn extra money. You can try getting a second job. (I work as a weekend receptionist at a nursing home on top of my regular full-time job.) You can drive for Uber or Lyft. You could even try babysitting. Find ways to get a little extra cash and put that towards your emergency fund.
  3. Cut a habit. Do you buy Starbucks every morning? Eat out every night? Cut that out! That bi-weekly nail appointment? How about doing your nails at home? That money would go really nicely in your emergency fund, trust me. And you’ll begin to see it grow faster than you realize.
  4. Sell your old stuff. I’m a big fan of Plato’s Closet. It’s a quick easy way to get rid of old clothes and shoes and (hopefully) get a little bit of cash. You can also try selling items on Craigslist, such as old furniture or electronics. Once you cash in on your crap (yes, I just called it crap because you probably don’t need it or use it anymore), you can put that money straight into your emergency fund.
  5. Choose the right account type. When setting up your emergency fund, it’s worth doing your research into the type of account that is best for you. High interest savings accounts will help you save while earning a little bit of interest… and who doesn’t love free money?
  6. Set it up automatically. Automatic deposits to your account of choice will make the saving feel, well, automatic. Being automatic means you won’t need to make a conscious effort to save. How great does that sound?


Experts agree that an emergency fund is a financial necessity. Yet a significant number of Americans do not have one. With these easy tips, you should be able to start building your fund right away.

What are some ways you’ve built your emergency fund?

Source: Young Finances


About the Author

- LaTisha Styles is a motivational speaker, millennial money expert, and spokesperson specializing in simple finance for millennials. LaTisha is the producer and host of Young Finances TV, a weekly series featuring funny, insightful videos on the basics of personal finance. LaTisha has been quoted in Forbes and Mainstreet, featured in The Economist, and mentioned in US News as a top personal finance expert to follow on Twitter. You can follow LaTisha on Twitter for daily millennial money tips to budget, invest and achieve success!

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study