Lose Your Nest Egg Paying for an Emergency? 10 Expert Tips on How To Bounce Back
Written by
Cindy Lamothe
Edited by
Chris Cluff
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Say your dusty car finally calls it quits. Or you need sudden hospitalization that racks up a ton of bills. Emergencies like these can easily eat up your hard-earned savings. But this doesn’t mean you should despair.
As Michael Ryan, finance expert at Michael Ryan Money, said: “Dealing with a financial setback like wiping out your nest egg due to an emergency or debt is emotionally and financially draining, but it’s not the end of the road. It’s a hard lesson many learn, and it often serves as a wakeup call to take control of your financial future.”
If you’re stressed about how to recover these losses, here are 10 expert tips to help you rebuild your nest egg.
Emergency Fund First
The first step in bouncing back is rebuilding your emergency fund, Ryan explained. “Without this safety net, you’ll find yourself in the same precarious position should another unexpected event happen.”
As with most experts, he recommends aiming to stash away at least three to six months’ worth of living expenses.
Revamp Your Savings Strategy
Next, you need to look at your monthly savings strategy.
“Turn on automatic transfers for a portion of your paycheck directly into your retirement fund,” Ryan said. “Automating this process removes the temptation to skip contributions.”
Get on a Budget and Use It
If you’re not already on a budget, get one going, said David Bakke, a personal finance writer at Dollar Sanity.
“It should take about 10 minutes to set up,” Bakke said. “More importantly, use it and review it on a monthly basis.”
For example, if you overspent on groceries by $100 in any one month, he said, you need to pare back in other categories by the same amount. Conversely, if you spent $100 less on entertainment in a month, that surplus should go directly to replenishing your nest egg.
Cut Costs and Liquidate
Sometimes, financial recovery is a game of inches, said Ryan, adding that it’s important to scale back on non-essential expenditures and consider selling items you don’t need. “Every little bit helps.”
Double Up on Contributions
Once you’re back on your feet, Ryan recommends exploring ways to ‘double up’ on your retirement contributions.
“This could mean taking advantage of employer match programs or dedicating bonuses and tax refunds to your retirement savings,” he said.
Start a Side Hustle
“There are literally thousands of ways to generate income in your spare time, and we’re all good at something,” Bakke said. “And even if you only have an hour or so of spare time each day, that can be used to drum up cash. If you can find a hustle that generates $500 worth of income each month, you can have $500 in your nest egg after 10 months using that strategy alone.”
Jonathan Merry, a finance expert at Moneyzine, suggests looking into online opportunities. Platforms such as Upwork and Fiverr offer a vast array of freelance tasks.
“From a client’s perspective,” he said, “I have engaged and invested heavily in hiring professionals ranging from editors and translators to creatives like writers and designers.”
He said the freelance marketplace is bustling with potential, presenting daily opportunities as companies are perpetually in recruitment mode.
Set Short- and Long-Term Goals
If your nest egg was at $10,000 and you lost it all because of an emergency, you’re not going to get that back overnight, Bakke said. “That’s why you need both short-term and long-term goals.”
Maybe one short-term goal is to save $250 in the first month, in order to start off easy, he said. Then maybe you set a goal of two years to get back to your original $10,000.
“And when you hit a short-term goal, celebrate that modestly,” he said. “That will help you stay motivated and on track.”
Put Your Money To Work
According to Dana Ronald, CEO of Tax Crisis Institute, after a crisis, you should make saving a priority as soon as you can.
“Having a well-crafted financial plan is crucial, especially after unexpected setbacks,” Ronald said.
One thing to consider is investing in high-yield savings accounts or stocks with growth potential. He said, “While it’s important to balance risk with security, taking smart risks can help boost your savings over time.”
Ronald said to remember compound interest: “The longer your money has to grow, the more it will earn in interest.”
That said, he believes all of these tips will mean little if you don’t have a solid budget in place and stick to it.
“It may be tempting to dip into your savings again,” he continued, “but remember why you’re rebuilding in the first place.”
Use Practical Tools for Managing Money
Rebuilding savings requires a purpose-driven approach, particularly during periods of uncertainty, Merry said. He suggested leveraging tools and resources designed to bolster savings efforts and manage spending effectively.
“Seek out banking services or apps featuring automated savings derived from expenditures or fixed sums. Certain platforms provide comprehensive views of spending behavior, highlighting potential segments for further savings.”
Avoid Obsessing Over Your Finances Daily
If you’re practicing responsible spending and diligently saving, Merry said, your financial cushion will naturally regenerate over time — so there’s no need to worry too much.
“Continuously monitoring your bank balance can lead to unnecessary stress and impulsive financial decisions,” he advised. “Instead, stay calm, approach each day as it comes and trust that your savings will recover gradually.”
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