Six Ways to Build an Emergency Fund When You’re Broke

Unexpected financial crises and emergencies are inevitable. They come and go like seasons. But if you live paycheck to paycheck, in case of crises comes knocking at your door, how do you plan to tackle it? Would you have money stashed somewhere to cover up those expenses? If not, you could be knee-deep in financial difficulty, leading you down the path of selling things or asking for loans to compensate for the cost of the emergency.

In a study conducted by the Federal Reserve for Economic Wellbeing of U.S. Households in 2015, it was reported that on average, 47% of the US citizens would find themselves in trouble if they had to raise $400 for an emergency situation, without relying on plastic, taking an unsecured quick direct loan, or giving something up for sale.

Therefore, an emergency fund is mandatory to ensure financial security in uncertain situations. By accumulating small amounts of money, you will be able to create a nest egg for yourself. As a wise man once said, “It wasn’t raining when Noah built the ark.” Being proactive provides a shelter for you on rainy days. However, we understand that starting from scratch can be a little difficult, which is why we have 6 tips below to streamline the process of building up an emergency fund for you.

Start small

Financial advisors swear by an emergency fund and advise it for financial stability. Although, for an average US citizen, it can be daunting to gather up hundreds and thousands of dollars, considering the major portion of their salary that goes into mortgage payments, credit card bills, and retirement funds every month, it is a good idea to take baby steps. Even $5 – $10 every day can go a long way in establishing your emergency fund. One important thing that you should keep in mind is that you shouldn’t concern yourself with the end amount of the emergency fund on a regular basis as it can derail your goal. Yes, it takes time to accumulate a large amount of money, but perseverance and grit is going to get you there.

Trim down your expenses

While there are plenty of ways to cut down your overall expenses, we would recommend you approach this habit in a way which would actually make your emergency fund look good. So, for example, if for a while, you have been wanting to quit processed foods, soda, or canned goods, now is the right time to do it and put the saved money into your emergency fund.

In addition, check to see if you have any magazine or online subscriptions that you don’t use anymore. According to research conducted by McKinsey & Company, plenty of Americans have at least two subscriptions that they have opted for. So, once you have spotted unused subscriptions, cancel them.

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Since we are on the subject of cutting down expenses, let’s talk about the havoc that coffee shops wreak on your budget. While you will hear some people scoff at the thought of saving money by cutting down on outside coffee, you can save as much as $7 on a day-to-day basis. Being determined can save you approximately $50 every week, which will make a substantial difference in your total accumulated amount for the emergency fund.

In addition to that, put any unexpected windfalls in the fund until you have saved up a reasonable portion of the total amount you have in mind.

Also, keep impulse purchases at bay. One way to do that is to practice the 72-hour rule. Instead of purchasing an item right away, you need to wait at least three days before you have made up your mind, in order to really know if you are acting on an impulse or you actually need what you are about to buy.

Once you have gotten into the habit of being thrifty, saving money will come naturally to you.

Have a separate account for your emergency fund

Where you put your saved-up money makes a significant difference. For your emergency fund to consistently grow, you need to learn to keep your hands off it, unless, of course, there is an emergency. Initially, you may think it is convenient to keep your savings in your current account, but it will actually run you down the path of failure. Financial experts suggest keeping all the amount you accumulated separately from your core account.

You might want to consider opting for an account that has a reasonable interest rate to give a boost to your total savings. You can see a list of the top rated online savings accounts here.


Parting with your hard-earned money every month can be difficult. You could be tempted to spend that money for an everyday expense, which is why, for your emergency fund to really build up, you may want to automate the process of setting money aside for it. Just think of it as a monthly bill you pay, while you put it on automatic setting and build your nest egg without having to put thought into it every month.

Get a second job

If your schedule isn’t jam-packed and has wiggle room for a part-time job, then consider going for it. It will give you a salary boost and make the process of saving up for an emergency fund a lot easier. Your second job can actually be based on your talents so that you enjoy having it. Maybe you have always been into taking photos, creating banners, or writing articles. These are actually skills that can get you paid, so consider cashing in on your talents.

Revisit your budget monthly

We would recommend that you glance at your emergency fund every month so that you have an idea about the pace at which it is growing. If it looks decent, great. If not, you need to examine your monthly expenses and see if there are any areas where you can cut down costs to add more money to the pot.

The bottom line:

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Inertia leads you nowhere, so, to propel yourself in the right direction you need to build positive momentum regardless of how tiny the steps are. Like Lao Tzu said, “The journey of a thousand miles begins with one step;” great things can be achieved with just a little determination.

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