How To Build a 24-Month Emergency Fund

Emergency savings memo and stack of money.
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When the going gets tough, the tough bust into the emergency fund that they’ve wisely been building up. Ideally these savings are easy to access and tapping into them won’t break the bank because they’re serving their exact intended purpose: to cover you in an unexpected financial crisis.

It’s commonly advised that we all have a six-month emergency fund on hand. But why save for more than the typically advised amount? Isn’t a nest egg of six months or even a year enough? 

Sadly, the answer is: Possibly not. 

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“The future is unpredictable,” said Adrian Tudorache, personal finance writer at Today’s Finance. “Look at what the last few years brought upon everyone: the pandemic, supply chain shortages, inflation, the war in Ukraine. Building a sense of security is invaluable these days.” 

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If you’re able, constructing a 24-month emergency savings fund can only help you and your loved ones. Here’s how to do that. 

Scope out Your Monthly Budget 

Time to assess  your monthly budget, again! 

“Take a look at the money going in and out to understand your finances on a monthly basis,” said Mary Hines Droesch, head of consumer and small business products at Bank of America.

From there, look for places where you can cut back spending altogether and put that amount toward savings instead. Can you temporarily forgo multiple streaming services? Are you regularly dining out more than once a week? Once you’ve identified areas for potential savings, keep the momentum going by “paying yourself first” and scheduling automatic transfers to your fund on or around payday equal to that “found money.”

Follow the 50/30/20 Method 

“A good rule of thumb for budgeting is to also follow the 50/30/20 method,” Droesch said. “Fifty percent of your after-tax income should cover needs (rent, groceries, student loans, etc.), 30% should go to wants and 20% should go into savings. However, since you’re looking to save enough funds to cover a two-year span of time, consider re-evaluating your percentages in order to stay on track towards achieving your savings goal.”

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Better Manage Your Cash Flow 

“Most times, we tend to pay our bills all at once, but sometimes that can leave you short and (you) reach out for short-term personal loans,” said Paul Sundin, CPA and tax strategist at Estate CPA. “A simple solution you can look into is adjusting the due dates of your bills to help you balance your finances better every month, enabling you to put a little extra into your emergency fund.” 

Keep the Funds Separate From Your Other Money 

As with any growing nest egg, you’ll want to keep this 24-month fund separate from your other budgeted dollars. 

“Create a separate bank account for your emergency fund to prevent the temptation to spend money you (are saving),” said Kelvin Stewart, co-founder of US Bad Credit Loans

Maintain a Standard Monthly Deposit 

“You must keep a standard monthly deposit so that no matter what comes your way, you can comfortably save,” said Stella Scott, co-founder of Easy Payday Loan. “This is a crucial step to building a 24-month emergency fund without stretching your budget. It ensures you maintain a specific increment in your savings to reach your deadline without prolonging it, especially if you never fail to deposit the said amount or put aside an amount lower than required.”

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Use a Financial Advisor To Invest (and Fight Inflation) 

Dumping cash into an account is certainly one aspect of building an emergency fund; but, if you’re aiming for a whole two years of savings, you’ll likely need to look at investing (chiefly to fight inflation). That’s a big step. Consider retaining a financial advisor for guidance. 

“Work with a financial advisor to figure out where you can invest your money and earn more interest than in a savings account,” said Melanie Musson, a personal finance expert with ExpertInsuranceReviews.com. “While you should have three to six months of funds available instantly, savings beyond that should not sit in a bank account. You’ll be losing money every month with inflation, and there’s no benefit to offset that loss.”

Bring In More Money  

If you’re barely getting by as is and can’t afford to put aside a bulk of your monthly income, a side hustle could be imperative. 

“If you want to save even more money, consider boosting your income,” said Samantha Hawrylack, a personal finance expert and co-founder of How To FIRE. “This could mean picking up a part-time job or looking for ways to earn some extra money on the side. The more money you can bring in, the faster your emergency fund will grow.”

Seek Overtime Opportunities  

“If your place of employment allows it, working overtime at your current job is a more efficient way of earning more money than working a second job,” said Shaun Myers, founder of Debt to Zero. “Overtime wages pay more, and you will save time on travel to another job.”

Use Round-Up Services To Help 

“You can take advantage of apps that round up your purchases,” said Jon Dulin, founder of Money Smart Guides. “There are even some banks that will do this for you as well. Basically when you spend, say $24.35, your purchase is rounded up and $0.65 gets transferred from your checking account to a savings account. While the amount doesn’t seem like much, it adds up over time. Last year I saved $750 doing this.”

Consider a Credit Union 

“(An) important action to take is to start saving in a location that has your best interests at heart,” said Jenna Carson, financial partner at Money Lucid. “My advice is to save with a credit union — a membership-run organization that cares about their customers because they aren’t driven by profits. These organizations (often) give a higher percent return on your savings in comparison to a bank.”

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About the Author

Nicole Spector is a writer, editor, and author based in Los Angeles by way of Brooklyn. Her work has appeared in Vogue, the Atlantic, Vice, and The New Yorker. She's a frequent contributor to NBC News and Publishers Weekly. Her 2013 debut novel, "Fifty Shades of Dorian Gray" received laudatory blurbs from the likes of Fred Armisen and Ken Kalfus, and was published in the US, UK, France, and Russia — though nobody knows whatever happened with the Russian edition! She has an affinity for Twitter.
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