Emergency fund graphic
designer491 / iStock

20 Painless Ways to Grow Your Emergency Fund

View Slideshow
Emergency fund graphic
designer491 / iStock

Lesson Learned

Over this past year of pandemic and recession, too many of us learned that our emergency fund — if we had one — fell woefully short when needed. Others found their retirement nest eggs shrinking. But the lesson is the same from either issue. "It's important that this realization be accompanied by a resolve to dig in and correct the problem," says Gerry Hafer, a certified Social Security adviser at the senior-supporting AMAC Foundation. "The most productive way to do this is to build a plan and establish a budget designed to bring cash outflow in line with inflow, but allowing for at least a portion of available cash to be set aside. Even if it's only a few dollars." Read on for suggestions on how to tweak your finances and create your own cushion, aiming for as little pain as possible.


Related: What the Pandemic Means for Your Taxes

Calculate Income and Expenses
Syda Productions/shutterstock

Determine Your Financial Need

The first step is to figure how much money you need, remembering that doesn't involve trying to keep up with the spending of a neighbor, friend, or relative. Some say a cushion should equal three to six months of your salary, while others say 10 times your monthly expenses — but the real answer is whatever you can afford to set aside. "You have to find out what works for you and your situation," says Lauren Silbert, vice president of personal finance site The Balance. "Is your job stable, or could you easily find a new one if needed? Do you live in a low cost-of-living area? Do you have kids? A medical condition? All these things will contribute to how much you should save. The more high risk your situation, the more you should try to save."


Related: 50 Ways to Prepare for a Recession

Life-work balance and city living lifestyle concept of business man relaxing, take it easy in office or hotel room resting with thoughtful mind thinking of life quality looking forward to cityscape
Chinnapong/istockphoto

Remember This Will Feel Good

No matter which way you choose to build an emergency fund, the idea is to keep in mind how good achievement feels. "Setting goals not only motivates us, but can also improve our mental health and our level of personal and professional success," Positive Psychology says.


Related: How to Make a Monthly Budget and Stick To It

goals
SDI Productions/istockphoto

Set Small Goals at First

You might imagine starting an emergency fund from scratch feeling impossible, but the point is not to get discouraged or overwhelmed. That's why you start small, working out a way to save your small amounts consistently. "Starting at all is a huge first step, and you'll be surprised how quickly even small amounts can add up over time," Silbert says.


Related: 100 Top Money-Saving Tips


For more great personal finance tips,
please sign up for our free newsletters.

Join an Association
Rawpixel/istockphoto

Get an Instant Team

If you thrive on support and encouragement, take a pledge at America Saves, a campaign managed by the nonprofit Consumer Federation of America, which "motivates, encourages, and supports low- to moderate-income households to save money, reduce debt, and build wealth." The site offers reminders, tips, and resources to help you meet your goal.


Related: Financial Advice for Households Making Under $75,000

Investigate Access to Accounts
davidf/istockphoto

Create an Emergency Fund 'Home'

Keep an emergency fund separate from how you pay bills, in its own "home," and think about how to get the most out of whatever bank you keep it in. "Is it in a savings account or a money market account? Remember these funds should be accessed without penalties, and you should think about placing them somewhere with interest so it can grow over time with or without additional investment," Silbert says.


Related: 11 Benefits of Banking with Credit Unions Instead of Banks

Transfer Money Into Savings Regularly
FG Trade/istockphoto

Automate Your Savings

Even better than thinking about how to keep your emergency fund separate is to never have to think about it all. "You can also set up automatic transfers from your checking account to your savings, so money is set aside each month without even having to think about it," Silbert says.


Related: 11 Ways to Make Saving Money Automatic

Netflix
wutwhanfoto/istockphoto

Stream Less, Save More

"I never watch pay TV," said virtually no one locked away at home during the pandemic. But as life transitions to a new normal, you won't want to vegetate in front of a screen when you can visit with friends, go to the movies, or attend a concert in person. Dump at least one stream or premium channel; if you need a video fix, look into Kanopy, which streams for free through many libraries and educational institutions.


Related: Comparing Netflix, Amazon Prime Video, and 18 Other Streaming Sites to Find Which Is Best for You

DELETE web button and mouse arrow on computer screen
stockcam/istockphoto

Resist the Temptation to Spend

If you're swayed easily by a deal — if you open an email and suddenly find that something you'd never even consider is suddenly a must-have just because it's on sale — skip those temptations. Unsubscribe from emails from stores, and toss out catalogs that come to your doorstep without a look.


Related: 45 Unhealthy Habits You Need to Rethink

Pumpkin Spice is Available Earlier Every Year
AlxeyPnferov/istockphoto

Scrutinize Mindless Spending

Cut back on daily expenses — the classic example being that Starbucks coffee drink you buy every day, which you can replace with your own great coffee at home. Though first you may need to identify what you don't "need." That might demand "a complete look at your current spending patterns, perhaps involving journaling everything you buy for a period of time and trying to spot the 'wants' and separate them from the 'needs,'" Hafer says.


Related: How to Satisfy Your $5 Starbucks Habit at Home

Sleep
andresr/istockphoto

Wait Before Spending

Take time to think, really think, about those needs versus wants. Before a shopping spree, the rule is: "Sleep on it." You'd be surprised at how you realize you don't really need another pair of leggings, however cute or cheap, in the cold light of morning. Besides, we all have closets full of clothes just waiting to be worn, in public, again.


Related: 16 Ways to Simplify Your Finances During a Time of Economic Turmoil

Make Money by Emptying Out Your Closet
Adrian Copos/istockphoto

Empty the Closet

Your closet is probably stuffed with clothes that no longer feel right, especially if you skipped the Marie Kondo craze. There have been countless stories in the past year about the impact of COVID-19 on our changing feelings around clothes. Sell the things you'll never wear again at a local consignment shop or online outlets such as Poshmark (or if you are or were strictly a name-brand diva, luxury sites such as The RealReal).


Related: 12 Places to Sell Clothes for Quick Cash

Bunch of American dollars for a christmas gift
franckreporter/istockphoto

Capitalize on a Windfall

Savings can get a big boost when you deposit extra money such as a generous birthday gift, tax refund, or work bonus instead of using it for a splurge. "If you're still building your fund and you come into money unexpectedly, put that straight into your emergency fund when possible," Silbert says. "Consider it a gift to your future self."


Related: 10 Smart Ways to Make the Most of Your Bonus

Women volunteer at cancer awareness event
SDI Productions/iStock

Rock a New Gig

Sometimes it's easier to bring in more money than to carve savings out of current income. If you discovered a skill you love during the pandemic, do it for money — a craft such as knitting to sell on Etsy or maybe making baked goods you can sell locally. You can also capitalize on your spare time, talents, and hobbies to earn extra cash. "Are you good at writing? If so, many small-town newspapers and local magazines often take on freelancers to handle assignments. Like to drive? Local delivery services seem to be popping up continuously, whether its grocery delivery, fast food delivery, even the local hardware store," Hafer says.


Related: 22 Tips for a Successful Side Hustle

scissors cutting a credit card
MarsBars/istockphoto

Get a Better Credit Card

Looking at your debt and doing a little research — comparing interest rates on credit cards — is another easy way to address ways to save. After the research, just apply and use the issuer's customer service reps to move debt to where you'll need to pay less every month. "Especially if you have heavy short-term debt, like credit card debt or installment loans, most financial counselors will advise you to inventory the annual percentage rates on all your loans and credit card and, wherever you can, transfer balances to the lowest APR," Hafer says.


Related: 26 Tactics for Getting Out of Debt

Showers of Deals
Ridofranz/istockphoto

Take Advantage of Card Rewards

Check out credit cards that offer cash back, and make that card your preferred card. "You'll be surprised at how fast the cash-back awards add up, especially if that's your sole card," Hafer says.


Related: 30 Worst Things About Credit Card Companies

Roof shingles with garret house on top of the house among a lot of trees. dark asphalt tiles on the roof background.
Ratchat/istockphoto

Use Your Property's Value

Take a look at your surroundings and see if there's a way to increase cash flow from what you already own. "If you own property, it also might pay you to consider a home equity loan as a pathway to paying off high APR debt," Hafer says. "The net savings from taking this step could serve as a steady addition to your savings account."


Related: 18 Pros and Cons of Home Equity Loans

Cooking Dinner
Geber86/istockphoto

Make More Food at Home

Everyone wants the restaurants of America to recover, but we don't have to eat out often, or extravagantly. The pandemic turned many people into serviceable (and in some cases, expert) home cooks. Reconsider the ease of the drive-thru window or the "no-occasion" meal out and pocket that money by making delicious meals at home.


Related: 100 Cheap & Easy Dinners

Failing to Max Out Retirement Funds
dlerick/istockphoto

Gather Your Loose Change

You may be surprised how much money you can save if you simply empty your loose change into a jar every night. (Though cash and coins became less common at many businesses during the pandemic.) When those coins reach the top, roll them and turn them in at the bank — avoiding supermarket machines, which are easier but take a percentage of the money.


Related: Why Pennies Still Exist and Other Money Trivia

Happy African American sportswoman and her dog walking in nature.
Drazen Zigic/istockphoto
woman hand nail varnish
Alla Aramyan/iStock

Keep a Pandemic Schedule on Services

We got used to less frequent services during the pandemic, from haircuts to manicures, lawn services to car washes, and that lesson should stay with some of us. While you won't turn into a millionaire by forgoing one or two haircuts or car washes per year, you will be able to add a little extra to your fund.


Related: The Top "How to" Searches in Every State During the Pandemic

Social Security Benefits
Alexey Rotanov/shutterstock

What Not to Do: Use a Retirement Shortcut

People who found progress on their retirement savings derailed in the past year might look to Social Security's early filing option as an easy way to replenish their reserves while continuing to work. But it's a last resort. "The discounted benefit will be with them for the rest of their lives. With life expectancies these days generally surpassing the break-even point on which the Social Security's actuarial calculations are based, early filing tends to work out negatively over the long haul," Hafer says. Drawing benefits while working will also likely fail Social Security's "'earnings test" of $18,960, resulting in a partial repayment.


Related: 12 Ways to Get the Most Out of Social Security