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How to Build an Emergency Savings Fund

Saving How I finally built an emergency savings

Emergency savings. Building one can seem daunting for anyone living paycheck to paycheck.

When I was 27, I went to an outlet mall because I just felt like getting something new. I remember being pretty happy with the jeans and shoes I found. I also remember calculating in my head that payday was two days away, I had a full tank of gas, and my team was going out to lunch the next day – so lunch was covered. Which, in my mind, meant I technically had the money for it. And honestly, at the time, this reasoning didn’t feel wildly irresponsible.

At least, that was until I got into my car and discovered the car battery had died.

My immediate reflex was to grab my shopping bag, march back into the store, and return both items before I even called a towing company. This was a reality check I desperately needed: I had no business buying anything that day. I’d love to say I learned my lesson then, but I didn’t. I had experienced this before and would experience it again.

Flash forward to two years ago:

When I met my fiancé, he was appalled at how poorly I managed my money. Not only did I have debt, I could never get past the $2,000 mark in my savings account. Every time I got close to exceeding $2,000, something would happen: my dog would get sick, it was my family’s birthday season (so many Virgos!), or I had mindlessly shopped online and spent too much. I was in better shape than I was in my 20’s, but no doubt about it, I was still mismanaging my cash flow.

There are several times in my life I have made big decisions and changed habitual behavior. And having to share my current financial state with this individual I so respected and wanted to share my life with, was finally enough to push me over the edge and, in all honesty, financially “grow up.”

In this post, I’ll define emergency funds, discuss how much you should have in your emergency savings, and take a look at the steps I took to finally get out of debt and build a meaningful emergency fund.

Use the links below to navigate to the emergency fund topic you’re most interested in, or read through to follow my complete journey.

What is an Emergency Fund & Why Are They Important?

Emergency fund definition: An emergency fund is a reserve of cash and/or liquid assets that you’ve set aside for emergency purposes only. A dead car battery, unexpected medical expenses, job loss, and home repairs are a few scenarios where an emergency fund might come in handy.

For the most part, your monthly budget probably covers things such as:

  • Recurring fixed expenses: your rent, utilities, car payments, etc. 
  • Variable expenses: groceries, eating out, shopping, etc.

But chances are, your budget isn’t built to handle hundreds or thousands of dollars in surprise expenses. The fact of the matter is: life happens, and it’s best to be prepared.

How to find the right emergency fund amount

In general, experts recommend stowing at least $1,000 in your emergency fund. However, it’s important to note that not everyone’s financial circumstances are the same. If you have kids or other financial dependents (pets count!), you may want to bolster your emergency fund beyond $1,000.

If you are self-employed or depend on commission, you may want to save up more than the recommended amount as well. These sources of income tend to fluctuate more, so having a substantial safety net is always a good idea.

Building an Emergency Fund Step-by-Step

Now that you know what an emergency fund is and what your target savings might look like, let’s take a look at how you can build your own emergency savings fund. In this next section, I’ll go over some generic savings tips to help you establish an emergency fund, as well as share specific examples that worked for my situation.

Step One: Look for ways to save

At its core, building an emergency fund is really just saving intentionally. The only difference between starting a savings account and saving for an emergency fund is that you’re reserving the cash for one purpose only: emergencies.

When it comes to finding ways to save, a good place to start is with a budgeting calculator. By inputting your income and expenses, you’ll be able to clearly and immediately see how much or how little wiggle room you’re working with. From there, you can assess where and how much you need to cut back — maybe spending less on groceries is a good move for you, or perhaps limiting online shopping makes the most sense for saving.

For me, this meant getting a roommate. It’s no secret living in the Bay Area is expensive. Being in my 30’s, I prioritized having my own space and privacy above building emergency savings. Rent was taking up about 44% of my total take-home pay. If you know the 50/30/20 rule, that left about 6% for the rest of my essentials, which included car expenses, utilities, gas, and food (grocery store). Using a 50/30/20 budgeting calculator, I realized that my rent was just way too high, so I reduced it by sacrificing my space and sharing the cost with a roommate.

Step Two: Reduce your take-home pay and reallocate

“Wait, what?! You want me to reduce the amount of money I get every month??” – scariest realization ever. Why would I put myself in a position to have less cash every month when I already felt like I could barely make ends meet?

Simple: I was spending too much on non-essentials. I had the biggest cable package, an actual online shopping routine (morning flash deals along with my morning coffee), DoorDash deliveries, etc. Spending money was easy, it felt good (in the moment), and convenience was key.

In order to really buckle down and stop these spending behaviors, I HAD to reduce my take-home pay to force myself into better habits. I did this by investing in myself and my future:

  1. Make sure I was contributing the right amount to my 401K
  2. Max out my Employee Stock Purchase Plan
  3. Automate 20% of my savings to an account that was not the same bank as my checking account.

The first two of these are pretty specific to my situation. When it comes to determining where to put your emergency fund savings, take a look at the savings, budgeting, and debt repayment options available to you. Using a traditional savings account, high-yield savings, or investing can all serve as ways to start up an emergency savings.

Automating my savings was another phrase I heard repeatedly and never really listened to. But it is genius and for anyone open and willing to hear the message: automated savings is the best way to build your savings without ever having to take any action on your own. Now, I stipulated the account had to be at a completely different bank than my checking account. This was crucial for my own peace of mind that I was not going to start transferring money right back into my checking account (been there, done that!).

Step Three: Stick to it

As I mentioned, there have been a few times when I have really decided to change something habitual in my life, and a few times I thought I made that decision, but it didn’t stick. How do I mimic the first and not the second?

I got stubborn about it.

My mantras included:

  • This is not a game.
  • I’m not going to allow this type of behavior anymore.
  • I will not carry any revolving credit card debt (this was after I paid it off).

Getting stubborn about not spending money can be more gratifying than you might think. You just have to see the gratification in a different light. In the morning, when I picked up my phone to start doing my online shopping, I would suddenly put it down and think, “NOPE. Not today!” And allowed myself to soak up the gratification of willpower. I also changed up my morning routine by journaling along with my morning coffee. This is not for everyone, and it didn’t stick forever with me, but at the time – it was exactly what I needed.

And of course, to make it easier on myself, I did do a few things to help ensure I stayed on course with this new behavior: I tracked my spending and budgets with Mint. I tend to check certain apps on my phone in the same order – FitBit, Instagram, Facebook. I just added Mint into this mix, so it was always on my mind.

I also deleted my credit card information from all of the shopping sites, unsubscribed from subscriptions, cut out cable, and only ate out on Friday nights – which was fun because it became something I looked forward to all week. There are tons of tips out there on ways you can make not spending easier for you. But you’ll never do them unless you drop the drama and just get stubborn about it.

Note: The steps I took may not directly apply to your situation, but the message is to be resourceful with what’s available to you, educate yourself on how to use it, and why you might need to make yourself uncomfortable in order to accomplish your goal.

Wrapping Up

Now, just because I got out of debt and started building an emergency fund did not mean life gave me a break and big expenses did not come up. It did become apparent my car was on its last leg, and I had to make that big decision. When it came time, I am proud to say I did not give in to my new-found sense of financial security and take on a huge monthly payment. I did a good amount of research, optimizing for a car’s affordability and value over its luxury and brand name, and found a car that suited my needs perfectly without the big brand name or monthly payment—another moment of great gratification.

As you work toward greater financial security, use these steps to start building an emergency fund of your own:

  1. Look for ways to save:
    1. Get a roommate
    2. Shop secondhand
    3. Use coupons
    4. Sell your stuff
  2. Reduce your take-home pay and reallocate
  3. Stick to it

Comments (46) Leave your comment

  1. Reading about this is motivational! Thank You! I’ve done the roommate part and less shopping, it’s made a big difference already! Now onto the eating out less and 401k! Thanks for sharing your story!

  2. Nice post, Jane…the personal details make it very real and relatable and the small steps you took and suggest make it seem achievable to anyone. Congrats on getting your finances under control and for a very engaging post.

  3. wow love the post. Brought tears to my eyes as I was able to relate to it 100%
    thankyou for putting this together, this was great.

  4. Jane, your story is very much like mine. My fiance lives with me and that helps, but there are areas of bills and lifestyle that still concern me. Very motivational what you said. A friend just recently recommended I try mint so I did. Just getting started.

  5. Thank you for the article. I’m just beginning my journey to better financial habits and saving. And embarrassed to admit it is much later in life than I should have started. Please share some ideas on credit repair as that is another major issue for me and would like to lighten my monthly load aand become a home owner rather than renter, but I can’t until my credit is repaired.

    1. I completely understand – I also felt the pressure of feeling “behind” on getting started. But you know what? We are all on our own journeys and have plenty to focus on today. The last thing we need to do is spend energy worrying about what we “should” have done.

      I do have ideas on credit repair! I will write a post on that soon. But the biggest recommendation I have today is to put an end to any revolving credit card debt. Keeping an eye on your debt to income ratio will be key in building credit and, eventually, buying a house.

      Have you checked out Turbo? It’s a new app from Intuit (our parent company along with TurboTax) that will help you keep an eye on your credit score and DTI ratio with a super cool debt dashboard. Not to mention, it has great content with tips on raising your score. Give it a try and let me know what you think

  6. i’ve been doing similar things to try to start saving! i had $20 in my savings account for the past five years, until i got a roommate which lowered my rent $700/month! and then started putting 50% of my paycheck into my savings account in an effort to cut down on my spending (if i don’t have it in my checking account, i can’t spend it!)

    it has helped me so much and i’m excited to try the other tactics you mentioned here

  7. Such an inspiring story and related to my life! i have always been trying less my expenses and savings .Need to focus on the strategies you put in your story. And quickly vanishing the habit of online shopping! these small steps helps a lot .thank you

    1. Yes! Quickly let go of the online shopping because there is nothing quick about paying off the debt! Really glad you found this useful. Good luck to you!

  8. Birthday season!!!! I have never heard this and I love it! Almost everyone in my family born in March or November. It’s like, why even think about Christmas until the Birthday Season is done! I am totally going to start using that phrase 🙂

  9. Great Article Jane… I curate some articles of how we do savings during emergency period. And you just point out some great tips. How we made through sharing expenses with roommate and change your habit of spending out to daily utilities. If you looking for some alternative solution. I personally experienced this stuff for life saving tip. Getting out of debt, auto title loans control your finances in certain conditions.



    1. Ugh, right?? I could write a book on my “if onlys”… but I guess time is better spent looking forward. Congrats on finding your path!

  10. Very nice. What’s sad is how simple this problem is once you think about it for more than 5 minutes. I literally take every check, put 20% in an account called Safety Net, 20% in an investment account, and an amount for car payments. The other roughly 50% is up to me. I want to start another account for recreation / splurging but I’m not sure if I’ll start getting charged for having too many savings accounts haha.

    1. I agree – when overspending is the problem, it is SO easy to fix from a logical perspective. But for many, bad habits are just really difficult to break.

      I like your system of paying yourself first and taking care of the basics. I haven’t heard of any penalties for too many savings accounts! But I’ll keep an eye out for that as that would definitely be worthy of another blog post. Thanks for your comment!

  11. I agree with everything. I just started using Qapital to automate my savings as I pay off debt. It’s going to take a while but I can do this.

  12. I’m struggling with being honest about the amount of debt we have. It’s been a slow drip that accumulated in large amounts. The finances have always been on me and I have tremendous guilt about what situation we are in now, that I haven’t shared with my spouse. It’s not because of frivolous spending on any one thing but it’s been the gas here and food there and repair here and late bill there and it’s added up to sizable credit card debt. I’m seeking encouragement to have the right conversation, prayer for grace from my spouse, and then advice on how to make the first step. Thank you

    1. Thank you for sharing. Having the money talk with your spouse can be incredibly stressful, this is so relatable. Our sister product, Turbo, is all about having #RealMoneyTalk and has even developed a community where you can ask questions and interact with others regarding finances. Maybe check that out? It can help to connect with others in similar situations, learn what approaches they took and to feel prepared to have the talk.

      My last bit of encouragement: Your finances do not define you. This is just a difficult phase that you will get through. Create a plan with small goals that you can celebrate along the way. Best of luck to you!

    1. Keep it up!! Slow progress can sometimes feel demotivating, so set small goals and be sure to relish every small “win”!

  13. Great article. It is motivating, not only in the application to finances and budgeting but to self discipline in other areas of life as well. Having said that,
    I use the budget platform, and have, perhaps, too many categories set up . However, I have found that I need to make sure all dollars are covered so as to “make it to the next month” without going over budget. With respect to an emergency fund, I have found it almost impossible to build a big enough balance to cover the inevitable emergencies that seem to arise over time. When I think that I’m getting a decent balance, something happens to wipe out it out! I end up “robbing Peter to pay Paul” as the saying goes. don’t see how I can set aside three to six months of expenses which is recommended by many, when I can’t seem to realize the growth of the small $100 per month I am able to put into the emergency account. Any suggestions?

    1. Setting aside three to six months can feel out of reach when you’re having trouble just getting the $100 to stay in your savings. I have absolutely been there. My suggestion is to really dig deep into your monthly expenses and see what you might be able to cut. It sounds like you already do this since you are tracking your budgets so carefully, so please don’t get frustrated by that initial suggestion (it has to be the first item to cover before going into anything else).

      Next, I’d recommend looking into a side hustle. The gig economy is huge and there are so many ways to earn a little extra income. Here’s one article that may give you some fresh ideas:

      I wish there were a secret new trick I could give you, but the reality is really simple: in order to find extra money to save, you need to either spend less or make more.

      Good luck to you and my final suggestion, as I’ve been saying in other comments: Set small goals! Relish in each achievement! Every step is important.

  14. Great post! I was never able to get past the 2K mark in my savings either. Then, I got laid off- in my late 50s. Ironically, it turned out to be great for my future savings, as I was, for the first time in 10 years, able to completely pay off my CC debt (with the severance package.) It was kind of exhilarating to realize how little I needed to live on without obligations to past behaviors (debt) weighing me down. I eventually found a job, and now consistently have about 10K for emergencies. I was always good about my 401k and am continuing to contribute, and pay off my cc debt at the end of the month. Keep it up!

  15. You need to increase your income..learn how to sell..i dont work for anybody, i have 4 sources of income…and my networth is over a million dollars… rent what you own..and invest..those are my tips

  16. Great article! I’m going to share with my friends, family, and clients. I appreciate the time you took to put it together and applaud you on the efforts you put into this process (and tenacity it took)!!!

  17. Im really challenged and inspired by your honesty and such a well thought out, entertaining and engaging post. You should write more if you don’t already. Side hustle much? Yes? No?

    1. Thank you so much for the encouragement! I feel so lucky I get to work at a company completely focused on helping people build confidence in how they manage their money. I am inspired every day reading comments and incoming social posts from people that are improving their finances using tools like Mint and Turbo. Many posts on the Mint and Turbo blogs have my personal stories. Its encouraging to know they’re having a positive impact!

  18. Well said. I’m glad the resources and tools worked for you and I hope you and your bf are good. When I moved from Vermont to grad school in Washington, D.C., I decided that I would not use my credit card for anything that I could not pay off. I had very little income from some free-lance work and I had aboui $1200.00 in credit card debt. I paid it off and to this day I do not carry a revolving debt on my credit card. The other thing I learned in a personal finance class regarding multiple debts was once you paid off one card or debt, take that money and put it toward your next debt to accelerate paying that off and so on. Genius I thought. And by then, my stubbornness had paid off and did not need that tip.

    1. I love it! Stay stubborn! 🙂

      And thank you for your wishes – we actually just got married last month, so things seem to be going well! Haha

  19. A great post! There are parts of it that I relate to fully indeed!

    I can’t stress enough how important it is to pay yourself first, automatically if possible. Nothing else really worked. Currently, 20% of the paycheck is going for investments and 10% to an emergency fund.
    It’s looking good.

    Wish you all the best!

  20. I really need help to get a grip on debt. I do really well for a while get my credit score up and then things come up and I blow it Any advice on how to get out of this rut I get myself in

    1. Ugh, I’m sorry to hear this. I definitely understand how frustrating it can be when you’re on a good track and then suddenly life throws a curve ball. Aside from the advice I give in this post, I recommend just keeping your spending in check. Is there anything you can cut back on? When you already feel like you’ve cut back so much, finding anything else can feel impossible. So, if you have something you love but you would hate to give up (like buying that afternoon snack at the vending machine or – dare I even go there – your daily coffee shop run), maybe find a free thing you can replace it with.

      I’m a little embarrassed to admit this because saying it out loud makes it sound silly, but when I’ve struggled with habit changes, I’ve been known to celebrate at the end of the day by lighting a few candles in my house. Candles happen to bring me sensory joy – the warm light, the scent, sometimes even the sound (if it’s the crackling type), etc. It’s a free thing I can do at the end of the day that allows me to celebrate resisting a bad habit. I am certain this would not work for everyone, but is there something else you can do that might bring you similar peace and joy?

      The second thing is to increase your income. We are living in a gig-driven world, so there are plenty of opportunities out there. Admittedly, I have not gone this route, but imagine having a second job or hustle where you can set 100% of that income aside for a rainy day.

      Good luck to you!!

  21. This is absolutely what I needed. I knew there were a lot of people out there like me, but I thought they were all kids fresh out of college, and I was the only 30-something single gal struggling with home ownership and fiscal responsibility. I sent this article to my dad and he said it was like I had written the article (har de har har, Dad). My credit card debt, student loans, mortgage, and debt to parents (they helped me pay to get crowns on my teeth because of night grinding and chipping of my teeth) are suffocating me, but I am being stupid with the money I still have left over. I have been looking for a “roommate” for a while, and hopefully that will finally come to pass. I also already do the employer match amount with my 401K. Never considered stocks at work. I have heard other people around me talk about it, but that stuff just always bored me. My dad also has been begging me to go talk to a finance person at my credit union…I think I might give that a try. I definitely have to get stubborn about this, so I can have enough money on hand to cover life’s emergencies (sick cat, car needing new tires, tree falling over in back yard, furnace crapping out right before the coldest day of the winter so far…). Anyway, thanks for the wake up call/mirror with which to see my self-destructive behaviors and lifestyle, and that I can’t carry on living without a safety net.

    1. Emilie! Thank you so much for your comment. I’m glad this resonated with you and can completely relate to what you wrote as well. I have trouble getting interested in the stock market too. But I have to say, taking advantage of my employer’s ESPP plan was pretty essential in my strategy. There are definitely some watch outs! For example, you will have to pay taxes on what you earn in the stock market, you want to be confident in your company’s immediate future (that you can sell it at a higher rate than they gave it to you) and you will want to be very aware of the timing (some employers have selected dates you can sell their stock to avoid insider trading concerns). But if you can consult with a CFP as your dad suggests, it may be the right thing to do! Good luck to you and happy holidays!!

  22. This is wonderful. I’m in a pretty ok financial position now, but it took a lot of hard work. Despite having grown up with TONS of financial advantages, or maybe because of it, I didn’t develop into a financially responsible adult until my very late 20s (like, 29.75). I think it’s important to recognize financial privilege—I have a large network of relatives and friends who could bail me out if need be, and that isn’t the case for tons of people—but also to recognize that that privilege doesn’t necessarily beget financial stability and can actually be detrimental.

    For all of my 20s, I took it as a given that I would live virtually paycheck-to-paycheck forever because I found money intimidating and was building a nonprofit career. Then I looked at my credit score for the first time. It was not a good time.

    Now, I take a lot of pleasure and pride in saving money and building wealth for my future—hello 403(b)! I delight in not owning a car, in cooking at home, in exercising restraint and getting clothes tailored instead of replacing them. It took me many years to get there.

    I just got a big raise, and I’m excited to automatically transfer most of the additional take-home pay immediately into savings, keeping my daily income pretty fixed. And I’m dipping my toes in the water of investing, something I NEVER thought I’d do.

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