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How to Build an Emergency Fund Even With No Money to Start

Emergency fund

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If you’re the type to live paycheck to paycheck, what will you do when an emergency expense falls on your lap? Will you have the funds needed to cover it? If not, you could find yourself in a real financial predicament, prompting you to scramble to gather the money needed to pay these unexpected bills.

Maybe your furnace broke down on the coldest day of the year, or your car suddenly needs a new transmission. There’s literally an endless list of potential emergency scenarios that you could face which would demand extra money from you. And if you don’t have it, you could be in some real trouble.

That’s where an emergency fund can come in really handy. By contributing small amounts to this separate account every day, week, or month, the money will slowly build up into something that can prove to be a real life-saver when an unpleasant surprise pops up.

If you’re wondering how to save more money, here are some money saving tips for building an emergency fund, even if you’re starting from scratch.

Take Baby Steps

The thought of having to save hundreds or even thousands of dollars can seem pretty overwhelming and daunting at first, but you shouldn’t necessarily focus solely on your long-term goals. You’ve got to start somewhere, and taking baby steps towards building an emergency fund can start with small contributions. There are plenty of ways to save money, and every dollar you put in the pot will add up.

Keep in mind that building up significant savings takes a long time, so don’t let the long-term commitment discourage or distract you from your end goal. Start small and build up from wherever you happen to be.

Start off with small goals, such as targets of $50 or $100 at a time. It’s a lot easier and faster to save up small increments of money, and when you do, you’ll feel as though you’ve accomplished a great feat. Repeat this process over and over and by the end of the year, you may be pleasantly surprised at how much you’ve managed to save.

Keep Your Emergency Savings Account Separate

Contributing extra money to be put towards an emergency fund will be futile if you don’t keep that cash separate from your other accounts. Before you start saving up, you’ll need to open up a completely separate account that will be dedicated only to your emergency funds.

Try to get an account that comes with a respectable interest rate so that you can even make a few bucks as your fund continues to grow. Keep the fees associated with this account in mind as well, and do some research into what options you have that won’t cost you much in fees.

Automate Deposits Into Your Emergency Account

It takes some willpower to make it a point of parting with your precious money and depositing it into an account that you won’t be tapping into for everyday expenses. It’s also easy to forget to set aside a certain amount of money each paycheck to be put towards your emergency fund.

Automating payments is nothing new: consumers are automatically paying their bills every day, and you probably are too. As such, think of your emergency fund contributions as regular monthly bill payments that need to be paid by a certain date every month.

Set up automatic deposits to take care of these “bills” so that you make sure they are made without being tempted to spend that cash before your contributions have been made.

Emergency money
Unexpected expenses are part of life.

Cut Back on Expenses

Take a good hard look at what you spend your money on every day, week, and month. While a lot of your income will certainly be going towards bills, you’re probably spending a pretty penny on frivolous expenses too. All the money you usually spend on specialty lattes, dinners out, and extra shoes can go towards an emergency fund.

When you go grocery shopping, be sure to bring a list with you and stick to it. Don’t casually throw in extra products just because they might be on sale, and never go shopping when you’re hungry. You can save even more money at the supermarket by clipping some coupons or scanning store flyers for specials before you go.

Review your cable bill, cell phone bill, gym membership, and any other bills like these to see where you can potentially cut back. If your contracts and memberships are premiums, consider going with basic plans to save some money each month.

Cutting back on the things you love is no fun, but you’d be surprised at how quickly you’ll be able to adapt and the amount of money you can save by making such sacrifices.

Get a Side Job

If you’ve got some extra time in your schedule, consider supplementing your income somehow. You can always look for a side part-time job, or even put your talents and skills to good use to generate a little extra money. Maybe you’ve got a penchant for photography, blog writing, or graphic design, all of which are services that can potentially be marketed and sold. Even small contributions can be a huge help when it comes to building your emergency fund.

Revisit Your Budget on a Regular Basis

Every so often, go back and take a look at your emergency fund to see how quickly it’s growing. Determine where you anticipate the funds to be at specific intervals. If it’s growing at a healthy pace, great. If not, it may be time to reflect on your efforts to see if there is more you can do to add to the pot.

Put Your Tax Refund Towards Your Savings

If you get money back after paying Uncle Sam every year, put that check towards your emergency fund instead of blowing it on a vacation or the latest smartphone. This is a great opportunity for you to put a large lump sum of money towards this account. You may even want to consider having your tax refund deposited directly into your emergency fund to avoid the temptation of cashing in on it.

The Bottom Line

It can be tough to contemplate parting with your money and putting it towards something that you may not need to use until much later. But if and when that rainy day comes, you’ll be extremely grateful that you committed yourself to making these important contributions. Life has a tendency to throw curve balls at us, and when that happens, being prepared is your best defense to coming out the other side unscathed.


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