6 Neat Ways to Build Your Emergency Fund

by David@MoneyNing.com · 28 comments

Some of us are creative thinkers, especially when it comes to making excuses about saving for our emergency fund. From the weak economy to the falling dollar to high gas prices, there are new ones every day. To break the trend of using our creativity to think of excuses, I challenged myself to instead think of some not so obvious ways to build an emergency fund. I actually had fun doing this exercise but what’s more important is for those struggling to build an emergency fund to try some of the tricks listed below. Here they are:

Treat the Emergency Fund like An Expense
This one might not be so creative, but why not add a twist to it by having your family member bill you for it? The plan actually works best if your kids collect the money because late payment is going to be painful. Trying this idea will also involve your children in a real world situation earlier in life while giving you a chance to teach them about financial matters. (Click here for 20 more personal finance tips to teach your kids.)

Pretend Everything Cost 10% More
If you automatically put 10% of the purchase price into the emergency fund every time you buy something, you will very quickly build a big emergency reserve. Doing this makes everything more expensive, so if you are disciplined enough to implement this, you may end up buying less too.

Alternatively, pretending our utility bill is double the cost will also work the same way. Be creative.

Save Every $5 Bill
I didn’t come up with this idea because a lady already managed to save a good amount of money doing this. I bet it was fun every time she received cash.

Pretend Gas is $5 a Gallon and Save the Difference
Gas is expensive but not many are driving less. Maybe you should try to pretend that each gallon actually costs $5 and save the difference. Do the calculation every time you fill up our cars and deposit the difference into your savings account.

Rewards from Credit Cards
If you use a credit card without a generous reward program, do yourself a favor and switch to one that does. Once you start receiving the rewards, transfer them directly into your emergency fund.

Sell Your Old Stuff
Everyone has stuff lying around the house that can be sold. Start selling them and put the profits into your emergency fund. (Maybe if you add a note that explains the reason for selling is to build an emergency fund, people will actually not haggle you as much on the price.)

Any Other Suggestions?

How do you save money for your emergency fund? Do you have a creative way to entice yourself to save? We’d love to learn from you so please share with us.

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{ read the comments below or add one }

  • J J says:

    Sell my things? I’ve been down that road before; been there, tried that. Nobody wanted my things. Even if they did, all they ever offered was a piddling little amount that, if I added up everything, would barely make $2! Not worth it. I gave over on that attempt. Any other suggestions would be grateful received, and attempted. Thanks! God bless you.

  • Houston MerchantServices says:

    I save a dollar per day and increase it every month. I also take a percentage from my salary. At first I find it really hard but later on, it became really easy for me.

  • Mrs.AS says:

    What is Next? In order to move on after a brokedown divorce and Now its time to Stand Alone with my financially strong hold,due to Student Loans and small children that came into exsistence during my marriage when he was in the Military..Now,we are divorced
    and children are gone…Back to square one with past student lkan that I really regret at this moment and a bill of non child support or pension,.,what or how can this be turn around.,.?when its just me? Any Solutions that Positive. …You can simply email me directly@ mrsas214@yahoo.com.

  • Pat smith says:

    I stopped paying child support. Saved a bundle.

  • Don says:

    Why not just figure out how much you think is reasonable for an emergency fund and aggressively save up to that number ASAP and then forget about it? It’s an EMERGENCY fund. It might not wait for you to nickle and dime it to a reasonable number.

  • David says:

    One of the best way’s I would recommend is getting out of your cellphone contract. Calculate the ETF (Early Termination Fee) and then switch to a prepaid provider (for example Tmobile, $30 gives you 1500 talk or text combined with 30mb web) or boost mobile ($50 unlimited with shrinkage $5 every 6 month until you have $35). If you are on AT&T or T-Mobile, you don’t need a new phone, you just need an unlock code that you can call your provider and get it free or google it and costs are as low as $1.75 per unlock code. Pretend you are still in contract, The money you save goes directly into your savings fund.

  • Justine says:

    Or hey, better idea get rid of the credit card. If you are having such a hard time saving the money you do have then why are you spending it before you get it?

  • AnaRose says:

    I save all the $2 dollar bills or any other crisp and new bills that I come across with. They’re too pretty that I feel bad spending them.

    • Kate says:

      I did this when I lived in Canada; saved all the $2 coins (Toonies) in a bank that I could not see through. When I got $50 worth in there, I put it in the savings account. I also have $40 each 2 weeks deposited in my savings account; I don’t miss it and it’s there if needed. I am retired on Social Security so don’t have the large sums to deal with that you working people have. Nevertheless, it works.

  • Jay says:

    I found a cheap gas station that was on the way to a client I saw at least twice a week and filled my tank. I saved the difference between what I was previously paying to fill up my tank, and the cost at the less expensive station. Once I got to 50 bucks, I invented a game. The goal was to take this money and find a way to double it every 30 days. for example, buy bulk jewelry very cheap (maybe a $1 a piece) it retailed for $15, I sell it to my bargain hunting friends for $7. Then I would take that money and ask my friends what kind of items they were looking for. When I ran across the item at a store, or library sale I’d call and ask if they wanted it and name my price. It was like being on a treasure hunt and watching the money from the “game” grow.

    As with life the “you know what” eventually hit the fan. But I was prepared. So I just started the game again. This year, I am “playing” it much more aggressively. Once I “play” enough to build up a substantial amount I’m looking into coin operated laundry machines, and vending machines.

    “If you plan for the bad times, you’ll only know good….” R. Kiyosaki

  • Hesiod says:

    I have two bank accounts. One is a checking account and another is an interest bearing account. I set up an automatic cash transfer from my checking account every two weeks when my pay check is deposited to the interest bearing account. So, a fund builds up over time (usually about $800/month).

  • Tom says:

    Each time I visit my doctor I pay him cash. I have no insurance. I pay myself in my savings fund the same amount I have to pay him. I started this last year. I am 40 years old. Using this method I plan to retire in about one year. yuk, yuk. Laughter is still this best medicine.

  • maxie says:

    Another one is to look at the bottom of your grocery receipt and put that phoney look-how-much-you-saved-today amount into savings. It adds up.

  • Cory says:

    I manage my emergency fund by rounding up all of my transactions to the closest dime. whether my transaction ends in a .01 or a .59 I round up making them .10 or .60. This method of rounding has put over 100 aside for emergencies oveer the last 6 months. It builds slowly, but being on a tight budget it is nice to just be putting something aside.

  • Kelly from Almost Frugal says:

    This post has been included in the 141st Festival of Frugality, going live at Almost Frugal September 2nd 2008. Don’t forget to link back to it when you get a chance.

  • Scott @ The Passive Dad says:

    I really like your creative ideas and recently canceled my gym membership and plan to put the $30 towards emergency account. Lot’s of fun ways to cut costs and put it towards savings. I like the gas idea, but it would be hard for me to consistently move money. Some of the other readers have already suggested it, but auto saving is the way to go.

  • Emily says:

    I am a big believer in the automatic savings plan at a separate bank. I do most of my banking with Bank of America but set up a travel fund and emergency fund at ING Direct. Every week, $12 goes into travel and $17 goes into emergency (not sure why I picked those numbers — just seemed like not too much and not too little). I barely even notice them disappearing from my checking account each week, but after a few months I have way more in my savings than I realized. I also try to add extra money to those funds whenever I can or whenever I get a windfall, but I really believe in having small automatic transfers, too. It really helps build a solid fund with you barely even noticing.

    • Don says:

      THIS is a very legitimate post. Something specific and helpful. Too many times I read financial “advice” that is something like, “just do X, but don’t forget to counter that with Y”. That kind of comment is useless.

  • marci says:

    Every ‘odd’ check goes directly to the savings/investment account. This could be a rebate, a tax refund, an insurance refund, a check from the health insurance to cover something I already paid for, a birthday or Christmas gift check, etc. If it’s a gift check (out of state family), I deposit it in the account, and then, if I chose to, I spend up to an equal amount out of my personal checking account for the gift I decide to buy. That way I get the gift and savings 🙂

    I also put every third paycheck into savings – I get paid twice a month – altho once in a while it’s the fourth paycheck, and not the third. 🙁

    Plus I have a property sales check that comes in every month – that check goes directly into the savings/investment account also.

    Basically, any windfall that comes my way goes directly into savings. Plus all my dividends and interest income are either reinvested automatically, or go into the savings account automatically.

    Automatic deposits are not available thru my employer, so that idea won’t work for me.

  • Everyday Finance says:

    When balancing my checkbook, I round every payment up to the next full dollar integer in the ledger, capturing 25 cents here 75 cents there. With hundreds of bill payments per year, this adds up to a few hundred bucks each year in the checking account. I just posted on a topic like this for saving tips for college freshmen. Timely and important article MoneyNing, thanks for posting.

  • Sam says:

    Or you can try what David Bach suggested from his book. Do it automatically.

    Simply put, have your income (maybe 5-10% of your income) automatically transfer from your payroll and deposit it into your savings account before you even have access to it. As they say it, you cannot spend what you cannot see.

    By the time you’re 60, you should have more than a million without even knowing it.

    Fix My Personal Finance

    • Don says:

      I think you are completely unrealistic. If someone works for 40 years by the time they are 60 years old they would have to put away 25,000 each year in order to have 1 million dollars. Factoring in getting taxed 25% that is a gross income of 333,333 per year.

      If someone only worked 35 years before they were 60 years old and only saved 5% of their income they would need to make 666,666 per year.

      You’re a twit.

  • Steward says:

    Recycle. If you live in a state that charges you for buying cans or plastic bottles (like California does) then you are paying a five to ten cent tax on every container that you purchase (a 6-pack costs you an additional 30 cents). Definitely recycle your own bottles and cans and save the money, but if you don’t already drink soda or bottled beverages be sure that you benefit from the laziness of others and do recycle their stuff for them.

  • MoneyGrubbingLawyer says:

    I like to practice what I call “dishonest accounting” with my paycheques. I get paid bi-weekly, but all my bills (except my mortgage) are monthly. I plan my budget based on 2 pay periods per month, leaving me with 2 “bonus” paydays every year. I use these extras to pay down my debt, but you could just as easily use them to up your savings funds.

    It may not be a fast way to build cash, but it works.

    • RebelCat says:

      I do the same! I find budgeting much less stressful when budgeting to 2 paychecks/month rather than yearly/12. Otherwise, your budget will exceed your monthly income 10 out of the 12 months of the year. And it’s extra fun during the two ‘3-paycheck’ months, when we can watch that extra paycheck either funnel into our savings or (heaven, forbid) pay off an unexpected expense that popped up.

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