How To Build Your Starter Emergency Fund Fast

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Emergencies, they happen but they don’t sting as bad when you’re able to pull the money from your savings to cover it.  According to Bankrate.com only 40 percent of Americans would pay an unexpected expense of $1,000 from savings, 1/3 would borrow the money by using a credit card, personal loan, or by asking a family friend.  If you have to borrow it then that’s what you have to do but here’s the thing about borrowing money you borrow the money, you still have to pay it back so you now have another bill to pay each month. If you don’t have an emergency fund already, here’s how to build a beginner emergency fund fast.

How much should you save?

It has been recommended by many to start with $1,000, I even started with that amount but after my own experience, I personally think you need at least one month of expenses in your beginner emergency fund, especially if you are in a high cost of living area.

Once you pick an amount that makes you comfortable and now you can calculate how much you can afford to save toward your goal.

To calculate how much you can afford to save, you need to know the following:

Your fixed monthly expenses - These are recurring monthly expenses that are the same every month, like your rent, car payment, car insurance, gym membership, cable or even utilities that don’t fluctuate too much from month to month.

Your monthly debt payments - This is the minimum amount you pay each month for your mortgage, car payments, credit cards, student loans, personal loans, etc.

Your flexible expenses - These are for costs that vary month to month, so food, clothes, entertainment, hair, nails and any other discretionary spending you may do during the month,

Non-monthly expenses - This includes car taxes, registration fees, insurance payments (if you don’t pay monthly), etc.  You can save for these expenses monthly.

Take the total of the 4 expense categories and subtract it from your monthly take-home pay.

Now you know how much you can save in one month just from your income.

You need a separate savings account

Now that you know how much you can save just from your income, you need a savings account and I’m not talking about the savings account at your current bank.  You need a saving account at a bank that is not at your current bank and takes a little work to access, like across town or online.

If the account is hard to access, you are only going to put in the work if it is an emergency.

Here are a couple of banks I recommend:

CapitalOne 360  - CapitlaOne 360 allows you to set up different savings buckets so I have been using them for years to save for different goals.  I save for all of my sinking funds in this account, along with any other large ticket item I may need want.

Marcus by Goldman Sachs - Last year I saw the interest rate at Marcus climbing so I decided to move a portion of my emergency fund to Marcus.  So far so good, I love their interface and I‘ve had a great experience so I will probably move over the rest soon.

Other ways to build your beginner emergency fund fast

You may not be able to build your beginner emergency fund just from your income so here are some options.

Make it a priority by saving first

Instead of paying your bills first and saving last.  Save as soon as you get paid, then pay your bills. You can set a predetermined amount you can afford transferred to your savings account each pay period.  

Sell items around your home

We all have items around the house that are barely and never used or worn and they just taking up space. Do a little cleaning and organizing and sell those items online.  

  • Old cell phone, tablet or laptop sell it to decluttr

  • New or barely worn clothes or shoes, items around your home- eBay, Mecari and Poshmark

  • You can also sell items on Facebook Marketplace (just make sure you meet whoever you are selling to in a designated safe area in your city)

Use an app that would automatically save for you

One of the easiest ways to save without thinking is by using apps like Digit and Qapital to save.  I love both of these apps because I am a spender and I like for most of my saving to be done automatically and both of these apps will do that for you.  It’s amazing how much you will save when you set a rule and let the app do its work and don’t worry both apps have the same 256 bit security encryption as your brick and mortar bank.

Check out my review of both products below.

Qapital Review

Digit Review

Pick up a side hustle

Side hustling is the way I built my beginner emergency fund and how I paid off $48K in debt.

There are so many side hustles out there, you just have to pick one you enjoy.  

A few side hustles, include mystery shopping, driving for Postmates, selling jewelry, selling items on eBay and more.  If you are looking for side hustles check out this post of 30+ side hustles.

Bring your lunch to work 3-4 times a week

Are you eating out every day for lunch?  Have you ever calculated how much you spend in a week on lunch?  Well, if we are being conservative and spend approximately $10 a day on lunch, that is $50 a week and $200 a month.  That’s money that could be going into your beginner emergency fund. Now if you are highly motivated you can bring your lunch to work 5 times a week and put the difference you saved into your savings account, but I believe in some type of balance so bring your lunch to work 3-4 times a week.

Don’t forget to put the amount you saved into your savings account, leaving it in your checking account is not saving.  It will eventually be spent.

Cut your cable

I know some people don’t want to cut their cable, but hear me out.  It doesn’t have to be permanent, just until you hit your goal and if you don’t want to completely cut off your cable, maybe you can downgrade your current package and add the difference to your savings account.  

Alternatives To Cable

Make adjustments to your monthly expenses

One of the ways that I save money is by making adjustments to my fixed monthly expenses.  I already talked about cutting cable, but I have also found ways to reduce my car insurance, get monthly discounts on my cell phone bill, eliminate subscriptions I don’t use, etc.

Cut expenses article

Bank your windfalls

Do you receive bonuses or tax refunds, bank them.  Not in your checking, the savings. If you receive a large amount of money, you can either bank the whole thing or spend a little, so you don’t feel completely restricted and bank the rest.  

Once you build your beginner emergency fund you can continue saving to build a 3 to 6 month emergency fund, stop building your fund temporarily to focus on paying off debt or you can save and pay off debt at the same time. Just don’t forget to put the amount you saved into your savings account, leaving it in your checking account is not saving.  It will eventually be spent.


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