7 Strategies to Kickstart Your Emergency Fund : Financial Stress

You already know the importance of building an emergency fund. But getting started and adding money to it can feel like an uphill battle. Given this, you need an emergency fund strategy to ensure that you stay on track and end up with a healthy safety net. One strategy to building an emergency fund from scratch is to seed it with existing funds that you already have set aside in savings.

However, not everyone has a savings account nor money simply lying around to be used. To get your emergency fund moving in the right direction, we’ve identified seven different hacks in this updated article that you can take to kickoff your emergency fund. These small steps can all add up to big savings that can prepare you for an emergency.

Opening An Emergency Fund Savings Account

Before you can even start saving, you need to create a savings account. Using a separate bank account for your emergency fund is the cornerstone of your emergency fund strategy. If you put all of your emergency savings into your checking account, you’re more likely to spend it. A savings account also offers other advantages.

High yield savings accounts can bring you interest on your savings. They’re different from regular savings account. They give higher interest rates than normal. This is because they sometimes require high minimum deposit amounts to open the account. A savings account may come with restrictions though. Savings accounts have withdrawal limits on how frequently you can take money out.

Online savings account providers may offer higher yields than traditional banks. With lower overhead, they can pass on savings to customers. You can get annual interest rates as high as 1.5% to 2%.

Round Up Spending

Most people don’t use cash anymore. So the old method of taking your spare change and dropping it into a jar may not work. Luckily, there are modern day tools to help you save your spare change.

Apps like Acorns track your debit and credit card spending. They round up each purchase to the nearest dollar and tuck away the change. This change then gets dropped into an investment account. Subscriptions for Acorns start at $1 per month to automatically round up your debit card purchases. It also includes automatic contributions from your bank account. More expensive options open up dedicated retirement accounts and debit cards.

Sell Old Stuff

Entrepreneurs like Gary Vaynerchuck preach selling old stuff to make money. We all have extra DVDs, clothes, tools, and more that we no longer use. If you’re trying to get a head start on your emergency fund, you can sell some of this excess.

Sites like eBay, Facebook Marketplace, and Craigslist can help you post listings quickly. Check completed and sold listings on eBay to see how much similar items are selling for. You could even have an old-fashioned garage sale for big furniture and appliances. Apps like Nextdoor let you share your garage sale information ahead of the sale to drive traffic!

Check Your Data Usage and Plan

When was the last time you checked your phone or Internet plan? You may be paying for unlimited data or high speed Internet you’re not using. Downgrading your plan can save you a bit of money every month.

For example, you may have purchased a TV and Internet bundle when you moved into your house. But once the introductory rate wears off, you may be paying extra for channels or internet features you don’t use. Review your cell phone and Internet bills to see if you’re overpaying for. Instead of using the extra money you save, redirect it to an emergency fund.

Streaming Services

Just like your cable bill, what are the odds you’re paying for streaming services you’re barely using? Netflix, Hulu, Spotify, Apple Music, HBO, Showtime, Xbox Game pass, and more all add up to a hefty entertainment bill. If you can cut just one of these out of your budget, you can contribute $10-15 extra each month to an emergency. Right now, Americans spend an average of $37 per month on streaming.

Remember that your local library likely has huge collections of movies and video games you can borrow for free.

Car Insurance

Car insurance isn’t something to set and forget. You should evaluate your driving habits every year and shop around. Maybe you started working from home this year. Or maybe your spouse is leaving work early to pick up the kids from school. These reductions in driving habits can yield big savings.

Some insurance providers may also offer similar coverage for less. Use sites like The Zebra to compare car insurance rates across all major providers in just a few minutes.

Keep Your House Running Efficiently

Americans spend thousands of dollars on their energy bills each year. But it’s usually one of the last places they think to check to reduce their spending. Here are some smart ways to keep your home running efficiently.

Change your air filter regularly. When your air filters are clogged with dust, your air conditioning has to work harder. That extra workload drives up your energy bill.
Run your appliances at night. Energy prices fluctuate throughout the day based on demand. During the afternoon, power is at a premium. But if you run your dishwasher or dryer at night, you’ll save big.
Check your water heater temperature. Your water heater is what keeps your shower running hot. But does it need to be as hot as you have it set? By default, most hot water heaters are set to 140 degrees Fahrenheit. You could lower it down to 125 or 130 and still get a hot shower.

Your Emergency Fund Strategy?

Hopefully you found these ideas informative. Remember to prioritize your emergency fund when you’re just getting started saving. It can protect you from taking on debt to cover an unexpected expense. But finding ways to save extra money each month can feel daunting. Bringing your lunch to work is a popular tip, but there are are other creative ways to find cash to save.