5 Effective Ways to Build an Emergency Fund


You are doing the right things – saving, paying down debt and even started an emergency fund. So what things do you do now to make that fund grow? Here are 5 effective money tips for building your emergency fund to the amount you will need to protect yourself in case disaster strikes.

Money Tips to Help You Build an Emergency Fund

Determine what you need – Have a specific goal in mind. A general rule of thumb is to cover spending with four to eight months of income. Make your focus on covering expenses, not replacing income. In an emergency, you won’t be going out to eat or making major shopping decisions, so you can get by at first saving less.

Make it accessible, but not available. You want to be able to get to your money in an emergency, but you don’t want to be tempted by at it at every turn. Put it in a savings account but if they give you an ATM card toss it or hide it. Other accounts may give you a check or pass book; you’ll want to put those where you won’t be tempted to use them. Remember – this savings is for a true emergency!

Make your savings a regular part of your budget. If your goal is to save $50 each month, make sure you have a place in your budget where you are taking that money from. Don’t just state that you are going to start saving, but determine how much and where that money is coming from. If you have to give up those movie tickets or double shot soy lattes to make your savings goals, it should be part of your budget plan for each month.

Take your time. You don’t have to save all of money in your emergency fund in one day or even one month. Relax and make a conscious effort to budget for your savings. Celebrate the small victories as you are able to reach the next month saved. Remind yourself regularly how far you have come – it’s encouraging and helps to keep you motivated to continue.

Roll it up. Once you have two months of your emergency fund saved, consider moving one month into a one-month CD. Continue making your regular contributions to your emergency fund. At the end of each month, roll the principle and interest back into another CD. Eventually you will have enough to meet another month’s emergency expenses. Put that 2nd month into a longer term CD – for two or 3 month. Continue rolling over your money in this manner and soon you will have 6 months of funds working for you while feeling protected at the same time.

Emergency funds are good tools for teaching yourself about saving as well as protecting you should disaster strike. Using these 5 money tips, you will be able to see your emergency fund grow more quickly, which will keep you encouraged to continue. The piece of mind gained from knowing you will be okay is priceless compared to the short term sacrifice while you are saving.

Do you have any favorite money tips on how to create an emergency fund? Share them in the comments.

4 thoughts on “5 Effective Ways to Build an Emergency Fund”

  1. We’re nowhere close to having several months’ worth of emergency money, but we try to keep some cash in the bank in case there’s a big problem. My biggest suggestion is to think beyond the obvious way of collecting money. Sell gift cards, work extra, etc. then deposit that money straight into your emergency fund.

  2. I need to look into those rolling CDs – we have our fund but I feel guilty that it just “sits there” not earning… are the CDs easy to buy and manage online these days?

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