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Ways to Save Money and Build Your Emergency Fund

June 30, 2020 10 mins

Besides having a balanced budget where you live within your means, having an emergency savings fund is the single most important way to safeguard your financial wellness. According to a 2020 Bankrate survey, the average emergency expense costs around $1,000 – but the cost of not having an emergency fund could cost you much more. That’s because emergency savings can help protect you from high-interest payday loans, credit card debt, and late fees.

If you’re already struggling to cover your expenses, take heart – even a small amount saved each week or month can make a difference when an emergency happens. Here, we’ve rounded up 27 different ways to save money. Not every idea will work for you, but we believe there are enough different ideas here that even the most reluctant savers will find something that will help.

Even a small amount saved each week or month can make a difference when an emergency happens."

Set goals for your savings

1. Save for categories first

If it seems daunting to save up three months’ worth of expenses, consider saving up for smaller, discrete categories first. For instance, first save up for three months’ worth of groceries. Then save up for three months’ worth of rent. Then do the same for car insurance, utility bills, etc. This method can help you feel more empowered and show you the real progress you’re making towards protecting your livelihood if an emergency occurs.

2. Create money plans in advance

Create plans in advance for how you will handle unexpected income like a raise, a refund, or a bonus. Something that many people can live with is saving 50% and spending 50%.

3. Rank your expenses

Download your expenses from the past two or three months into a spreadsheet. Print off two copies – one for you and one for a significant other, family member, or friend. Review all the expenses, marking them as High, Medium or Low importance. Then compare your notes with the other person. If you’re part of a couple, this can help you find expenses you both think can be cut. If you’re single, this can give you additional perspective on which expenses are important and which should be cut.

Turn saving into a game

4. Join a “no spend” challenge

Social media sites like Facebook and Reddit have personal finance groups with “no spend” challenges, where you join a group and then agree not to spend any money (or not to spend any discretionary money) for a certain length of time. You then post your progress, and the group challenges each other and keeps everyone accountable. Take the money you would have otherwise spent and put it into your emergency fund.

If you don’t want to join a social media group, consider posting your challenge on your own individual social media page, such as your Instagram account. Or go offline and share your “no spend” challenge with friends and family, and update them on your progress.

5. Set aside a reward first

If there’s a new restaurant you’ve been wanting to try or a new pair of sneakers you’ve been wanting to buy, put aside enough money for the meal or the shoes. Then set a goal, such as saving up two months’ worth of living expenses or four months of rent costs. When you meet your goal, treat yourself to the dinner or the shoes.

Make sure the relative amounts are appropriate – for instance, it would make sense to splurge on a $200 dinner after saving up $6,000 worth of rent. But it wouldn’t be wise to buy $150 sneakers after saving up $600 of utility bills.

6. Create a money jar for a special category

Get a jar from a dollar store (or your pantry) and put aside all money of a certain amount or category – for example, all $10 bills or all change you receive from restaurants. At the end of the month, put this money into your emergency savings.

Have work help you save

7. Make sure you’re taking advantage of all work reimbursements

Talk to your manager or HR department about all the reimbursements available to you at work – which could include cell phone discounts or incentives to exercise. These can add up over the course of a year, so contribute all the benefits into your emergency savings.

8. Turn “extra” biweekly paychecks into savings

If you’re paid bi-weekly, two months each year will have an extra payday. Save these “extra” paychecks into your emergency fund.

9. New Raise? Don’t spend it; save it

Unless you had an expense like rent go up, don’t spend your raise – instead, divert anything extra as a result of your raise into your emergency savings until you’ve built up the account to your goal.

10. Bring your lunch to work

Eating out consumes a huge amount of many monthly budgets. So if you’re not working from home, consider skipping just one meal out per week, and put that money into your emergency savings. Or alternate weeks, one week eating out for lunch and the next week cooking from home.

11. Increase withholding and fund your refund

Increase your tax withholding beyond what it needs to be – doing this will generally result in a larger refund. Then put that refund into your emergency savings. This is an especially effective approach for people who have difficulty saving month-to-month.

Leverage your healthcare and insurance policies

12. Put reimbursements from your FSA into a high-yield savings account

If your employer offers a flexible spending account (FSA) for qualified medical expenses, direct any reimbursements from that plan into a high-yield savings account. Since you’ve already spent the money on the original expense, the reimbursement can be put towards your emergency fund.

13. Use your HSA as forced savings

If your insurance has the option for a Health Savings Account (HSA), consider using it for forced savings. There are two ways to do this. First, you can simply build up your HSA account so you have money stashed away for a medical emergency. (Be sure to stay on top of HSA limits and other rules that affect your balance.)

The second way to use your HSA account is to pay all your reimbursable health expenses out-of-pocket as part of your regular monthly budget. Then, at the end of the year, get your legally allowed reimbursements for these expenses – and put all that money into your emergency savings.

14. Recalibrate your insurance deductibles

Talk to your insurance agent about your homeowner’s or renter’s deductible, your car insurance deductible, and any other deductibles you have. Some people have deductibles that are too low given their claims history and risk – and switching to a higher deductible could save you money that can then be put into your emergency savings.

While this method can save money, be sure to carefully consider your risk appetite and claims history with your agent before making a change.

Use investment and banking tools

15. Create separate accounts for income and for spending

Once you’ve determined your monthly budget, transfer that amount of money into your checking account each month – and have your paycheck directly deposited into a savings account. This way, you’ll only have easy access to what you need each month. Transfer the excess amount from your paycheck out of your savings account and into your dedicated emergency fund, so you can have that money earmarked for emergency and clearly watch that emergency fund grow.

16. Convert your credit card points to cash – and save it

Instead of saving up your credit card points for a free flight or other reward, convert it to cash and then put that cash into your emergency fund. An emergency fund may not be as fun as a free flight to the coast, but it will help you sleep better at night.

17. Temporarily split your retirement savings

Consider splitting the amount you’re saving for retirement into two – half for your emergency fund (until you meet your goal) and half for retirement. Not sure how much your emergency fund goal should be? Learn more about how much emergency fund you need.

If your employer matches your retirement contributions, consider contributing anything above the amount your employer requires for a match into your emergency fund.

18. Save your dividends

If you have a stock portfolio, it’s likely that you’re reinvesting the dividends. While this is a great way to increase your holdings, you would be better served building an emergency fund if you don’t have one. Divert your dividends into your emergency savings until you reach your goal amount.

19. Use round-up savings

There are several apps out there that will automatically round up your card charges, then save them. Patelco also offers this solution: Patelco Plus Checking. With this account, we’ll round up your total to the nearest dollar, then transfer the difference into your savings account – and then we’ll match 10% of the rounded-up amount and deposit it into your savings account, too.

If you opt for an app, just be sure to read the fine print about any fees or restrictions.

20. Set up an automatic transfer each week

Set up an automatic transfer each week from your checking account (the one you use for your day-to-day expenses) into your emergency fund savings account. Patelco Online™ makes this easy – just log in, hover over Transfer & Pay in the main menu, and then select Transfers to get started. Having a small amount of money go out each week can be easier to swallow than a larger, once-a-month lump sum.

Spend wisely to save

21. Buy secondhand

The next time you go to buy something – whether it’s a TV for the living room or a new jacket for work – look for a used item instead of buying new. Websites devoted to pre-owned stuff have become very popular. And don’t forget about your local thrift store. Then figure out the difference between the used item and the new item. For instance, if you paid $40 for a secondhand jacket instead of $100 for a new one, put $60 into your emergency fund.

22. Splurge and save at the same time

Next time you make an unnecessary purchase – like a new pair of shoes you don’t need, an expensive concert, or the brand name version of something you could buy generically – save an equal amount of the cost into your emergency savings. The first advantage is that it makes the association with saving less painful – you’ll look at your emergency fund and think about fun things. The second advantage is that you’ll be more cautious before making frivolous purchases.

23. Do it yourself

Consider any expenses you are currently outsourcing – like yard work, house cleaning, or grocery delivery – and temporarily do these tasks yourself. Then take the money you would have spent outsourcing and put it into your emergency savings.

24. Cut one expense per month

Each month, pick one monthly expense to cut – and divert this money into your emergency savings. For instance, you could start with your Monday morning coffee outing the first month. The second month, you could cancel a movie streaming subscription you don’t watch. These changes don’t have to last forever – only until you meet your savings goal.

Put extra earnings into savings

25. Get a side hustle

Consider a secondary job where you can make money from home – and put all your earnings into your emergency savings. Or, temporarily take a second shift or part-time job. It may be a very busy month or two with the additional work, but you’ll be protected for years to come when your emergency savings is built up.

26. Use your birthday or holiday gifts

Many of us receive cash or gift certificates on our birthday or at holidays. Save any cash into your emergency savings, and then turn your gift cards into cash for the same purpose. Some merchants will redeem gift cards in low amounts for cash. Cards worth larger amounts could be sold online to companies that buy gift cards. Just be sure to research any company you’re selling your gift cards to – there are several legitimate companies that buy gift cards, but there are also scammers.

27. Sell and then save

Poshmark, Facebook Marketplace, Nextdoor, and Craiglist can help you offload unwanted items and turn them into cash. Put anything earned into your savings account. Whenever you’re selling online, be aware of scams – which primarily occur when someone distant or foreign offers you a check or money order for your items.


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