5 Tips to Funding Your Emergency Fund

by GettingFreedom on April 12, 2012


The Finding Freedom Boot Camp has been underway for a month now!  So far we’ve covered creating a monthly cash flow plan, setting up cash-only categories, and cutting your grocery budget.

This week we’re going over the Emergency Fund.  Oftentimes we forget to include a cushion for the times when things don’t go as planned.  Let’s be honest with ourselves.  How often do things really go as we planned them to?

If you are one step ahead of yourself and plan for the unexpected things {like vehicle maintenance, home repairs, job loss, medical expenses, etc}–you won’t kill your budget.

You might be thinking that you can’t afford to fund an emergency fund.  However, the opposite couldn’t be more truthful.  You cannot afford to not fund your emergency fund.

What is an Emergency Fund?

An Emergency Fund is just that, a fund that is used for emergency purposes only.  It could be a separate savings account with your current bank, or an online savings account such as one with ING Direct.

Initially you should have an emergency fund of no less than $1000–before you even start paying off your debt. After this is done, you can start putting all of your extra money to your debt.

Once you are debt free, many financial experts suggest that you have a minimum of 3-6 months worth of living expenses stashed away in your emergency fund.  This will ensure that if there was job loss, you would be able to survive until you could find some sort of income stream.

Ways to Fund Your Emergency Fund

Any extra money that you have left over after you’ve created your monthly cash flow plan should go directly to your emergency fund until it has at least a $1000 balance–even if it’s only $10 a month.  You may feel like the process is taking forever, but in the end you will be thankful that you’ve had something to fall back on.

If you want to speed it up a bit you can try these tips::

Pay Yourself First

Have a set amount {$5, $10, $10, whatever works for you!} transferred to your emergency fund account as soon as you are paid, either by direct deposit or by manually transferring it.  This has worked out wonderfully for us.  Since we don’t actually see it in our bank account, be don’t miss it.  We aren’t tempted to spend it with the intent to pay it back, either.

Collect Spare Change

Every penny counts when you’re working toward a goal.  Dig through those couch cushions, your vehicles, and any spare change jars and cash it in.  You might just be surprised!  When we were funding our original emergency fund, we went through all of our change and cashed in almost $300!  That was a significant chunk off of our $1000 goal.


Yard Sales

I know that they seem like a lot of work for just a little bit of gain.  However, when you’re working towards getting debt free and building an emergency cushion–it works!  At a time like this you can’t be picky.  You’ve got to do what you’ve got to do, or you’ll never get anywhere.

Cut Back on Negotiables

I go into detail on non-negotiables and negotiables in my managing expenses post.  In a nutshell, it’s all the things you could really do without and that you have full control over their amount, even if it’s hard to admit that you do. ;)

This includes things like:: Haircuts, Clothing, Entertainment, School Lunches, Dining Out, Fuel, Cable/Satellite, Cell Phones, among others.

Now is the time to really, really look at all of your expenses and see just how necessary they are.  Can you lower your satellite bill, or ditch it altogether and get away with just Netflix?  We cancelled our satellite years ago so we could have extra money for our emergency fund.  Just recently we discovered that Netflix has many of the shows we used to watch {plus more!} for a fraction of the cost.  Plus we can watch it when we want to.

If you’re using your cell phone 99% of the time, do you really need the expense of a landline?  If you refuse to cancel your landline {I was once in this category, myself}, how about re-evaluating the need and cost of all those features? And that cell phone bill?  Do you use it enough to justify the expense? Do you really need to have internet at your fingertips and a million minutes? ;)

Just be Honest with Yourself

What are you willing to do {or give up} to whip your finances in shape?  You are in control now.  Let your finances know that.

Any extra money that comes in during the time that you are funding your emergency fund, should go directly into it, until it’s at the minimum $1000.


After making any adjustments to your negotiables, be sure to go back and create a new monthly cash flow plan.

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