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Setting money aside to cover yourself in an emergency can make a big difference in how financially secure you feel. It can also help you make it through a financial crisis without suffering a blow to your budget, or without relying on debt.
Whether you're starting from scratch or simply want a larger emergency fund, you can take steps to build your savings faster. Here are seven tips to boost your emergency fund.
1. Set a Goal Amount
If you want to have more stashed away in case of an emergency, start by creating a clear goal for yourself. Many experts recommend setting aside between three and six months' worth of basic expenses in your fund. But the right goal amount for you can depend on a number of factors.
First, start with a goal that you find motivating and attainable. You could aim to have $3,000 saved for emergencies by the end of the year, for example. That would require saving $250 a month, or $125 from each biweekly paycheck. Play with the numbers to find a savings goal that works for you.
Second, consider reasons you may want to keep more or less in your emergency fund. For example, if you have relatively low expenses, no dependents and stable income, you might find that keeping just three months' worth of expenses set aside is more than enough to make you feel comfortable. On the other hand, if you have multiple dependents or have unstable or variable income, aiming to have six months or more saved could be a safer play.
2. Know Where to Keep Your Funds
The simplest way to boost your emergency fund is to let interest work for you. The key is to keep your savings somewhere liquid—meaning someplace you can access your funds at the drop of a hat should the need come up—where it will also earn more interest than it would in your standard savings account.
To check both these boxes, consider signing up for a high-yield savings account. You'll earn a higher average rate than a traditional savings account while maintaining easy access to your funds.
Find High-Yield Savings Accounts
3. Save Automatically
Set up automatic transfers into your savings account each pay period to keep growing your emergency savings over time. In many cases, you may also be able to split up your direct deposit so that a portion of each paycheck goes directly into your emergency fund.
However you achieve it, paying yourself first can help you stay consistent and avoid eating into funds that you meant to add to your emergency savings.
4. Free Up Funds
To build your emergency fund faster, find ways to reduce your expenses and funnel what you save into your emergency fund. Here are some ideas for how to cut back:
- Cancel unused subscriptions. You could be paying for things on autopilot that you don't get much use out of, such as multiple streaming and music subscriptions. Do an audit of everything you're paying for on a recurring basis, and cancel anything that you don't need or enjoy.
- Cut back on dining out. If you eat frequent meals outside of the house, cutting back a bit could free up hundreds of dollars a month. Even if you just put a temporary limit on dining out, shaving off your meal budget and putting the difference into your emergency fund could pay off.
- Save at the grocery store. Head to the store armed with a plan for how you'll trim some money off your checkout total. Using coupons or a couponing app, shopping sales at your local stores, building meals around affordable staples and prepping your meals in batches are all good strategies.
5. Increase Your Income
Bringing in more money can help you boost your savings faster, though it can be challenging. If you have room in your schedule, pick up a gig or a part-time job to help you bring in more cash and build your emergency fund faster. Consider something with flexible hours that you can do around your current job, such as selling things online, freelancing or driving for a ride-hailing company.
You could also try asking for a raise at work, if the timing is right. Picking up additional shifts and taking advantage of any offers for overtime could also provide you with extra income to put into your emergency fund.
6. Put Windfalls to Work
If you come into a sudden amount of cash, such as a tax return, bonus, gift or inheritance, direct that money straight into your emergency fund. By putting extra income away, rather than spending it, you can build your fund faster—and without tightening your budget.
7. Try a Saving Challenge
If you're someone who finds motivation in challenges and games, try a savings challenge to boost your emergency savings. The idea behind a savings challenge is to stick to a set of rules that require you to spend less money, then add the funds to your savings account.
Popular ways to do it include the no-spend challenge, where you attempt to spend no money at all (save for essentials) for a given period, such as a weekend or a week.
Another plan is the 52-week saving challenge, which has you deposit an increasing amount of cash into your savings account each week. You'll start with $1 in week one, $2 in week two, and so on—and you'll be left with an impressive $1,378 by the end of the year.
The Bottom Line
Setting a goal amount and setting up automatic deposits into a high-yield savings account can help you get your emergency savings fund on the right track. From there, get creative with where you find extra cash to boost your fund. Scaling back your spending and taking on a side hustle can help you add more to your savings.
On top of getting serious about building your emergency savings, keep tabs on your credit. You can monitor your credit score for free through Experian for updates on your score and recommendations for moves you can take to build credit. By increasing your credit score now, you can save with lower interest rates when you need to borrow, such as for a mortgage or auto loan.