How To Rebuild Your Emergency Savings

Emergency savings memo and stack of money.
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When it comes down to it, planning for the unexpected, or even unthinkable, seems counterintuitive. More than just a checking or savings account, having an emergency fund bank account is a good way to not only reach your savings goals but also ensure your financial security.

Once you’ve had to use your emergency savings, though, you might feel like you’re back on square one — but it is possible to rebuild that account, one step at a time.

What Is an Emergency Fund? 

Unexpected expenses happen — and when they do, it is good to have money set aside specifically for this reason, so as to not hugely impact your finances or set you back when a financial shock occurs. An emergency fund is an easily accessible cash reserve you have set up in case of medical bills, car repairs or other issues outside your typical monthly budget.

This emergency fund is often a savings account that is separate from your day-to-day savings or checking account and only touched, as the name would suggest, in case of emergency.

Building an Emergency Fund

Every small amount you add to your emergency fund counts towards the larger goal. Once you’ve accounted for your living expenses and daily needs, look to begin to build your emergency fund by following these steps: 

  1. Start your savings habit.
  2. Be consistent.
  3. Track your progress.

1. Start Your Savings Habit

Step one in creating good habits is to start doing them regularly. Once you’ve set your savings goals, it can be motivating to not only see your bank account grow but also perhaps to put down the credit cards for things you don’t need. Sticking with a savings regime isn’t always easy, but what you do in the short term now, will greatly benefit your long-term goals.

Make Your Money Work for You

An excellent jumping-off point is to start your emergency fund with your tax refund this year. This way, the money doesn’t have to come out of your regular account and you get a solid start on your emergency fund. If you’re having trouble finding the motivation to save, try a savings challenge like the $5 Challenge or the Bowl-Grab Challenge.

2. Be Consistent

The best way to build or rebuild your emergency savings is to make consistent contributions. Here are some ways to help with your consistency.

  • Automate your savings: Set up automatic recurring direct deposits from your paycheck or transfers from your checking account. 
  • Set your budget percentages: One way to break down your budget and consistently set money aside is the 50/30/20 rule of budgeting.
    • This rule advises people to save 20% of their income every month. Once that amount is saved, 50% is then allocated for needs, including essentials like mortgage payments, rent and food. The remaining 30% of your income is for discretionary spending.
    • Of course, these percentages won’t work for everyone, so you should adjust them to fit your finances.
  • Be specific: Whether it’s daily, weekly or monthly, be specific as to when you put money in your emergency fund and the precise amount. 

3. Track Your Progress

Regularly monitoring how your emergency fund is growing will help keep you motivated to contribute and also give you a sense of accomplishment as it builds. If your account is high interest or high yield, you’ll see it grow even faster. You can manually track your progress or try a budget or money-tracking app, such as:

How Much You Should Keep in Your Emergency Fund

The common consensus is that you should have enough money in your emergency fund to cover three to six months’ worth of your expenses, whether that is just for you or your entire family. Some experts even suggest saving nine to 12 months worth to cover expenses. The money you keep in your emergency fund is directly correlated to your personal and unique financial situation.

Make Your Money Work for You

As expenses vary from person to person, so will the amount you should save. Any savings is a good starting point, so once you figure out your budget, start putting some cash reserve away so you’re prepared for whatever comes your way.

Celebrate Your Saving Successes

When you stick to any savings habit you’ve started, do not forget to pat yourself on the back and appreciate what you have accomplished. Once any goal is reached, it makes room for you to set the next one.

And don’t be afraid to reward yourself for reaching milestones on your way to the greater goal — a treat to look forward to periodically can help you stay focused on building your savings as you go, as long as you don’t overdo it.


Here are some answers to frequently asked questions about building or rebuilding your emergency savings account.
  • How much should you have in emergency savings?
    • A good rule to follow is to keep enough in your emergency savings to cover three to six months' worth of expenses. Calculate how much you spend on necessities and set aside three to six times that amount.
  • Is $5,000 enough for emergency savings?
    • $5,000 is enough for emergency savings if it is enough to cover three to six months' worth of your expenses. This amount varies depending on your unique financial situation and if the fund is for just you or needs to cover your family members.
  • What is the 50/30/20 rule?
    • The popular 50/30/20 rule of budgeting divides your income into three categories: 50% goes toward needs, including essentials like mortgage or rent and food, 30% is for discretionary spending and 20% goes straight into your savings account.
  • When should I use my emergency savings?
    • Though an emergency fund shouldn't be used for frivolous spending or on a whim, use it when you need it. It is there to help ensure you won't set yourself back financially if you lose your job or have unexpected expenses, like medical bills.
    • Essentially, emergency savings are to help you through all the unexpected things, which can be a large category, so plan as best you can.
  • Is a $1,000 emergency fund enough?
    • Though any amount you are able to put away for emergencies helps, the amount in your emergency fund should be enough to cover three to six months' worth of expenses, which means $1,000 is unlikely to be enough. Some people even go as far as to save nine to 12 months' worth of expenses.
Make Your Money Work for You


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