Although it's easy to plan for expenses like sending your teen to college or future family vacations, some situations arise without warning. Your child might end up with an injury that isn't covered by insurance, your furnace might break down on a cold winter's day or you might even lose your job. To avoid financial problems on top of unexpected repairs and other needs, it's best to have an emergency fund.
How Much Should I Save?
Personal finance expert Dave Ramsey has recommended in his books and radio show that people save an emergency fund with three to six months' worth of their personal expenses. This cushion can help protect you from having to take out a loan, tap into your savings account or borrow from your retirement.
Check out the following tips to get started padding your emergency fund.
1. Use Loyalty Programs to Your Advantage
Many of your favorite retailers have rewards programs — if you're not already enrolled, now is a good time to get in on the action.
"Join every loyalty or points program and mailing list available for places you already shop," said Josh Elledge, chief executive "angel" at SavingsAngel.com. "That's how you'll get special offers, including ones that can result in free items."
Elledge recommended points programs like ShopYourWay.com, which has numerous business partners.
"By belonging to them, you earn points — but better than that are the surprise points," he said. "These are given for free and can result in deep discounts on purchases you need to make anyway."
"Then, to fund your emergency fund, set aside the amount you would have spent without the extra discount," he added. "You'll be surprised how fast it can add up."
2. Cancel Your Cable Subscription
Chances are, you probably don't watch most of channels that come with your cable subscription, so get rid of it to boost your emergency cash.
"Substitute cable with online streaming services," said Jake Norton, co-founder and financial planner at Stewardship. "For around $10 per month, you can have services such as Netflix, Hulu Plus or Amazon Prime."
"Most people find that they can satisfy their binge-watching needs with one or more of these services," he said. "This can free up anywhere from $50 to $100 every month that can go toward building up your emergency fund."
3. Get an Additional Part-Time Job
If you're really committed to building your emergency savings fund, you won't mind dedicating some of your free time to earning extra cash to feel financially secure.
"One of the best ways for me to save is to boost my take-home pay," said Jeff Neal, founder of Jason Coupon King. "So, I side-hustle to earn extra income."
"One of my most profitable side hustles was doing gigs I found on Craigslist," he said. "In one month, I earned $655, while working about 35 hours, which factors out to over $18 an hour."
4. Set Aside Any Extra Cash
It's always exciting when extra money lands in your wallet. Instead of splurging on fancy dinner or an expensive handbag, stow the cash away for the future. Saving for emergencies is all about making sacrifices now so you don't suffer a financial setback when faced with an unplanned expense.
"Commit to saving any windfalls," said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network. "Make a promise that, if and when you receive extra money — from unexpected overtime, a gift, or even activities such as a yard sale — you will save that money in the emergency fund."
5. Sell Unwanted Items From Around Your Home
Fill your emergency fund with cash by purging your home of clutter. Cleaning house is a great way to stay organized as you simultaneously earn extra money.
"Get in the habit of routinely organizing your belongings, and then sell unneeded items on eBay or Craigslist or hold a yard sale," said Gallegos. "Perhaps you can do this every three to six months. Even small proceeds can accumulate surprisingly quickly in savings."
6. Swap Credit Cards for Cash
Overspending is easy when you pay with a credit card because you can charge it even if you don't currently have the funds to cover your purchase. Increase your emergency savings by paying with cash to decrease your spending overall.
"Using credit cards might be easy and convenient, but paying with cash — or a debit card — helps ensure you stay within your budget and achieve the goals for which you are saving," said Gallegos. "Many studies report that people spend 15 to 20 percent less when paying with cash."
7. Stick to Your List
Heading to the store without a clear plan in mind is an easy way to ensure overspending. It's too easy to get carried away and leave with a giant bill — and nothing you actually need.
"Make a list before you go shopping," said Gallegos. "You are more apt to impulse shop if you head out without a list specifying just what you want or need. Plus, when you make out a list, you can review what's already in your pantry, freezer or closet, so you don't purchase items you don't need."
8. Create a Menu Based on Weekly Sales
"Try planning menus around what's on sale, and see how much you can save," said Gallegos. "Check out weekly sale ads, and plan your daily menus around the weekly offerings to the degree possible. You can also check daily mark-down areas in the store for items ready to expire — for instance, meat that must be used within a day or two — and clearance sections."
In some cases, you might have to deviate from your grocery list, but that's not necessarily a bad thing if your last-minute substitute will save money and leave you with more cash for your emergency fund.
9. Keep Grocery Store Savings
It feels great to look at your receipt and know you saved money.
"If you have a grocery store savings card, you'll see the savings the card accrues for you on your receipts," said Gallegos. "Take the amounts of those savings each time you visit the store and actually save them."
Incorporating this savvy strategy into your plan to boost emergency savings can help you increase funds — and fast.
10. Redeem Credit Card Rewards for Cash
If you're like many people, accruing credit card rewards is one of the main reasons you pay with plastic. Instead of mindlessly spending your points, work them into your emergency savings plan.
"Check your credit card statements to see how many rewards points you have," said Gallegos. "Then, visit the rewards website to find out if you can convert the rewards into cash or gift cards."
"Some credit cards even double the value of your rewards at specific retailers," he added. "Commit to routinely saving the cash, or using the gift cards for regular expenses, and then saving the money you would otherwise use on those expenses."
11. Negotiate Your Monthly Bills
"Everyone is being overcharged on their monthly bills," said Barry Gross, founder and president of BillCutterz.com. "Saving money on these outrageous bills is my area of expertise."
Gross said his team of professional negotiators can help individuals save up to $1,500 per year or more on their monthly bills — including those for cable and satellite television, phone service, and internet.
Whether you hire the professionals to reduce your bill or negotiate it yourself, you could add some serious cash to your rainy day fund.
12. Invest in a Mutual Fund
Saving for emergencies by investing in a mutual fund is easier when the money is automatically taken out of your account.
"Your emergency account must be liquid, but all mutual funds have a money market account," said Abby Eisenkraft, CEO and senior tax professional at Choice Tax Solutions, Inc. "You can automatically set up a debit from your checking account on a desired date of the month, and it will transfer right into the money market account you use for your emergency fund. Set it and forget it until you need it."
Before long, you won't even notice the money is gone — and your emergency fund will be flush.
13. Treat Your Emergency Savings as a Bill
When it comes to personal financial planning, it's a lot easier to part with the money you put in savings when you take on the mindset that it's just another bill. Instead of looking at saving as an optional move, think of it as a mandatory expense.
"You pay your rent, you pay your cell phone," said Eisenkraft. "Make your emergency fund another bill each month and sweep in the money."
14. Cut Costs on Holidays
Buying holiday gifts for each of your family members and friends can be both expensive and exhausting.
"Instead of buying gifts for everyone, try to get the family to agree on a Secret Santa where all you need to do is buy one gift," said Eisenkraft.
When you only have to purchase one gift, you'll have plenty of extra money to put in your emergency fund — and more time to enjoy the happiest season of the year. Plus, odds are that many of your loved ones will be grateful that you spoke up and put a limit on this year's giving.
15. Skip the Morning Latte
"A simple way to save for an emergency fund is to put the $5 you were planning on spending on your morning latte aside each day," said Deborah Sweeney, CEO of MyCorporation.com. "Doing this five times a week gives you $25, which comes out to $100 each month — an amount that can be adjusted depending how often you go out for coffee. By the end of the year, you'll have about $1,200 in savings."
Of course, no one expects you to go without your daily caffeine fix. Simply brew a pot of coffee at home each morning to increase both your energy level and your emergency savings fund.
16. Convert Your Cash to Change
If you're prone to burning through the cash in your pocket, Gene Caballero, co-founder of GreenPal, has a solution that will benefit your emergency savings:
"ATMs normally only dispense $20 bills," Caballero said. "So, any time I broke that bill and was given $1 or $5 in change, I would take those bills to a car wash to get those converted to quarters. I would take those quarters to my milk jug at home and drop them in."
"Not having those paper bills would force me to save because I don't want 23 quarters in my pocket," he said. "But it would also make me think twice about the $20 bill I was about to break."
17. Opt for a Cheaper Phone Plan
If you tend to pay your monthly cellphone bill without looking at the charges, it's time for a much-needed review.
"Do you really need unlimited data on your phone? For most people, the answer is no," said Stephanie Genkin, a certified financial planner and founder of My Financial Planner, LLC. "So, change to a cheaper plan and automate the difference each month to an online account after you get paid."
18. Stop Prepaying Your Student Loans
"Sure, you want to get out of debt and be done with your college loan, but I've seen some interest rates as low as 2 percent on some old government loans," said Genkin. "Pay the required monthly amount on time and not a penny more. The additional money you were paying is better off in an emergency account, so you have cash when you need it instead of borrowing from your credit card that carries a 19.25 percent interest rate."
After building up a solid emergency savings fund, go back to paying off your federal student loans if it makes sense for your current financial situation. Wanting to live debt-free is admirable, but establish a comfortable nest egg first.
Educate Yourself: 15 Ways to Pay Off Student Loans
19. Become an Airbnb Host
Instead of taking out emergency cash loans for unexpected expenses, make use of any additional space you have in your home. Earn money for your emergency savings by putting that extra room on Airbnb. Site users choose from all types of spaces — including shared rooms, private rooms and entire homes or apartments — and the amount of money you can earn depends on your location and the type of space you offer.
For example, according to Airbnb, Los Angeles residents could earn an average of $596 per week just for sharing their homes.
20. Check Your Automatic Withdrawals
"Check your credit card statements for automatic withdrawals," said Annalee Leonard, founder and president of Mainstay Financial Group. "Obviously, businesses have a vested interest in convincing the consumer to agree to an automatic withdrawal. I have no problem with that when it's a vital service, like my car insurance, but when it's for an online newspaper subscription, or kids' games, or a Netflix subscription or Amazon Prime membership, make sure you are using the service or cancel it."
It never feels good to pay for services you aren't using. Saving for emergencies in this way ensures you won't miss the money because you were already spending it — just in the wrong place.
21. Grow Your Own Produce
Grocery shopping is an expensive, yet essential task. Fortunately, there are ways to ease the burden.
"Anything you can do to cut down on that grocery bill can make a big difference," said Leonard.
She emphasized the value of growing a garden at home by noting the USDA statistic that families of four spend an average of $1,000 per month on groceries. Watch this bill shrink when you can decrease the amount of produce you need to buy.
22. Cancel Your Gym Membership
Swapping the treadmill for an outdoor run will allow you to explore your local community while getting your exercise in.
"Being in shape and healthy will cut down on your medical costs, but you don't have to shell out to do it," said Leonard. "Dump your gym membership and create a home workout program instead. Not only will you save the membership fee, but you will also save money on gas and time driving to and from the gym."
This personal finance tip is an easy way to add money to your emergency fund without changing your lifestyle habits.
23. Save Your Third Paycheck
If you're paid biweekly, you're well aware of the magical third paycheck you receive twice per year.
"When you do receive a third paycheck in a month, put the entire thing towards savings, period," said Brian Davis, co-founder of SparkRental.com.
Knowing exactly how to allocate the funds can be confusing, but don't worry: Your other two paychecks should cover your monthly expenses. Depositing this entire paycheck in your emergency savings is a quick way to boost your account balance to a healthy level and avoid having to take out any emergency loans in the future.
24. Get a High-Interest Savings Account
Open a high-interest savings account to put money aside for your emergency fund and enjoy two-fold benefits — a safe place to keep your money where you won't be tempted to spend it and the ability to earn interest on your balance.
Instead of automatically opening an account with your local bank, shop around to find the best available rate. Do your homework to make sure the account doesn't come with monthly maintenance fees or account minimums that you can't meet. And, since you're saving for emergencies, make sure there's a way to access your funds quickly if needed.
25. Give Your Social Life a Makeover
Saving for emergencies is much easier when you're not going out for dinner and drinks every night. Cutting these expenses can seriously inhibit your social life, however, so get your friends on board first.
"Shift your social life from restaurants and bars to dinner parties and cookouts at your friends' homes," said Davis. "The markup on food and alcohol at restaurants and bars is three to four times the retail price."
26. Take Advantage of Happy Hour Specials
If you must go out to eat or meet friends for drinks, schedule your outing during happy hour. Typically held between the hours of 4 p.m. and 7 p.m., happy hours regularly feature deep discounts on food and drinks. You can get the same menu items people will pay full price for later in the evening, at a fraction of the cost.
Calculate the amount you saved by going out early and deposit this sum in your emergency fund.
27. Stop Paying Overdraft Fees
In 2016, JPMorgan Chase, Bank of America and Wells Fargo garnered more than $6.4 billion in customer ATM and overdraft fees, according to a report by CNN Money and S&P Global Market Intelligence. That's $300 million more than was collected the previous year. Fees vary by bank, but regardless of the amount, wasting money you literally don't have never feels good.
"There is truly no excuse for this," said Danny Kofke, a personal finance author. "If you balance your checkbook and spend less than you earn, you will never have to spend any of your hard-earned money on these silly fees."
28. Stick With Standard Shipping
"In the instant gratification days we live in, many people order things online and have these items shipped by priority mail," said Kofke. "If you cannot wait the standard shipping timeframe — usually between five and 10 days — for something to arrive, you might want to consider doing without that item completely."
Get what you need without paying extra fees by shopping far in advance. Planning ahead ensures your item will arrive on time by the most affordable shipping option available.
29. Open a No-Penalty CD Account
Certificate of deposit accounts might not seem like great emergency funds, as most aren't known for being liquid, but some accounts can actually be effective savings options. Find a no-penalty CD that allows you to withdraw money when you need it. These nontraditional CDs, such as the one offered by Ally Bank, offer competitive rates that will help you grow your savings even higher while the funds are sitting in your account.
Sure, your rate might not be quite as high as one attached to a traditional CD, but the benefit of not having to pay an early withdrawal fee far outweighs this slight downside.
30. Buy Generic
"Think about it — you use paper towels, napkins and plates only once — even I don't re-use these," said Kofke. "Spending more for the name-brand version of these products is a big waste. Buy the generic brand instead and save."
Add up all the money you save on each shopping trip by opting for generic products, and deposit it into your emergency savings fund.
31. Switch to an Interest-Bearing Checking Account
Trading in your traditional account for a checking account that earns interest is an easy way to raise money for your emergency fund. Just be sure to conduct plenty of research and read all the fine print to make sure the account doesn't require you to pay monthly maintenance fees or meet a monthly minimum.
After making the switch, you don't have to do anything to earn monthly interest payments. Check your monthly statement to see how much you earned and transfer this amount to your emergency savings fund.
32. Stop Going to the Movies
"I realize going out to the movies can be a fun way to spend an evening, but this fun is definitely costly," said Kofke. "If you are going to the movie theater twice each month, you are spending a lot of money in exchange for a few hours of entertainment. And, we are not even including the snacks, because who can go to the movies and resist the $8 bucket of popcorn and $5 soda?"
The average cost of a movie ticket is $8.89, according to Box Office Mojo, whereas the cost of renting a Redbox movie will only be $1.50 as of Dec. 2, 2017. Ultimately, you probably won't remember where you saw the movie in a few months anyway, so take the economical route and bulk up your cash savings by viewing flicks at home.
33. Get New Quotes for Your Home and Auto Insurance
If you've had the same insurance policies for three years or more, it's definitely worth seeing if you can score a better rate with your existing provider or a competitor of equal stature.
"I know from firsthand experience how much this can save you," said Kofke. "I recently met with a local insurance agent for one hour and saved over $1,200 per year on my homeowner's insurance and almost $300 per year on my car insurance. I recommend you get quotes on these every three years."
34. Avoid the Dry Cleaners
"I can honestly say I have never had anything dry cleaned," said Kofke. "It does take me some time to iron my shirts, but I usually just let them pile up and, when there is a game on that I want to watch, iron while I tune in."
If you have dry-clean-only items in your closet, try to wear them a few times before taking them to the cleaners. Save money in the future by only purchasing clothing that can be laundered in your washing machine or by hand.
35. Don’t Pay Full Price for Local Events
"Sporting events can be an expensive venture," said Kofke. "I do not go to live games often, but every year for Mother's Day, I brave the Atlanta traffic and take my mom to watch the Dodgers play the Braves."
"I use the website ScoreBig.com and save on the price of our tickets," he said. "They offer up to 60 percent savings on certain tickets. This helps lessen the blow of spending $6 on a hot dog."
This technique can also be used for tickets to events such as concerts and theater shows; just be sure to comparison shop before paying face value. And use a legit site like ScoreBig, StubHub or the Ticketmaster fan-to-fan resale site so you don't fall victim to a scam.
Later, deposit all the money you save directly into your emergency savings account.
36. Quit Smoking
Smoking is an expensive habit that can quickly fund your emergency account when you quit. Smokefree.gov has a helpful calculator that reveals just how much money you'll save over the course of 20 years.
For example, if you cut down to smoking 10 cigarettes per day at Fair Reporters' reported $5.51 average cost per pack, you'll save $82.65 the first month, $1,005.58 the first year, and an astounding $36,990.67 after 20 years.
Put 'Em Out: 6 Guilty Pleasures That Are Costing You
37. Plan a Staycation
Instead of heading to Walt Disney World for the third time, cut costs by planning a staycation instead. Fox Business reported that staycations are a great way to save money and stick to a budget. Look for free activities, area attractions you have yet to explore, and spend time outdoors enjoying a picnic or playing sports as a family. Use any money you would have spent on the vacation to pad your emergency fund.
38. Buy Used and Save the Difference
Whether you're in the market for a living room set or a winter jacket, you can save by visiting thrift and discount stores. Michelle Duggar from the reality television series "19 Kids and Counting" told Parenting Magazine that their family motto is "buy used and save the difference."
In addition to thrift shops, there are organizations like Habitat for Humanity that have opened up store locations they call "re-stores." These facilities sell everything you could want for your home in excellent condition at a fraction of the price. If a rocking chair was going to cost you $500, but you got it for $150 at a re-store, you'd be able to put $350 of emergency money away.
39. Make Use of Your Local Library
There's no need to spend a ton of money on books when your local library will allow you to borrow the books for free. Many libraries even take requests should there be a particular book you have an interest in that isn't currently found on the shelves. Check with your local branch for extra freebies, like movie rentals, cooking classes, and special events for kids.
Up Next: When to Use Your Emergency Fund