4 Tips for Growing an Emergency Fund When Money Is Tight

Some financial experts recommend every individual or household have three months’ worth of living expenses in the bank, ready to deploy in the case of emergency. Other experts recommend even more six months’ or a year’s worth. While these are all admirable goals and their reasoning makes perfect sense, as financial emergencies can occur at any time many Americans are left wondering just how they’re going to save that amount on top of keeping up with living expenses and monthly bills.

The good news is you don’t have to fill your emergency fund overnight, nor do you need tons of disposable income to do so. Thinking of it as a marathon rather than a sprint is actually very helpful. Think instead in terms of what small actions you can take to grow your emergency fund over time.

Here are four tips to help you get started.

Set Up Automatic Deposits

The last thing anyone needs in today’s busy world is another tedious obligation. So, you’ll want to make saving as simple as possible something that happens without you having to remember to set aside money, then manually transfer it into a designated account.

Another benefit of automating your savings is how it reduces your temptation to spend “leftover” funds on non-essential purchases. In other words, you’re less likely to spend what you can’t see because it’s already safely tucked away in your emergency savings account.

Try a “Sneaky” Savings App

A Freedom Debt Relief article recently referenced on Twitter by debt expert Andrew Housser recommends consumers try out savings apps that round purchases up to the nearest dollar then transfer that difference from a checking account to an emergency savings account. It’s a “sneaky” way to utilize the change jar method in which a few dimes and nickels here and there can actually add up to an impressive sum over time.

There are a variety of round-up savings apps available, such as Acorns, Qapital, Chime and Digit each worth researching to see if it’d be a good fit.

Cut Obvious Non-Essential Expenses First

It’s normal to feel resistant to cutting anything else out of your budget, especially if you feel you’ve already sacrificed certain wants for the sake of budgeting. This is why it often helps to rank non-essential expenses on a scale from “I could live without it” to “I really want to keep this one around.”

Start small, with the one or two expenses you would miss the least. Case in point: 84 percent of Americans underestimate how much they spend each month on digital subscriptions. Maybe you’re paying for two or three video streaming platforms already and would barely miss your least favorite.

Rather than thinking of it as an all-or-nothing proposition, make gradual cuts to your least-essential costs then reroute those savings directly to your emergency fund.

Look for an Account Opening Bonus

You may earn a bonus just for opening a new emergency savings account. One writer describes for Business Insider how she took advantage of bank account sign-up bonuses between $100 and $300 to supplement her small salary. She says within a year of doing this several times, she’d amassed a “respectable emergency fund.”

Of course, you will need to keep track of each account you open and keep an eye out for fees.

It is possible to keep growing an emergency fund when money is tight; it’ll just take a dash of creativity, plenty of patience and some strategies like these to make it happen.