10 Ideas for Extra Money to Jump Start Your Emergency Fund

Neccessity of an Emergency Savings Fund

Large, unexpected expenses can wreak havoc on a budget or a debt-reduction plan if you don't have an emergency savings fund to cover necessary, but unanticipated expenses. Do you have enough readily available cash or savings to pay the bill when your car breaks down or the refrigerator quits working?
Without an emergency fund, would you be forced to use credit cards or bank loans to cover the expense?

But if you are already living paycheck to paycheck, how will you find the extra money to fund your emergency savings account?

How Much Should I Set Aside in an Emergency Fund?

Most financial advisors recommend a minimum of three months of living expenses for an emergency fund.  If three months is overwhelming, or you have significant debt to pay off, financial guru Dave Ramsey recommends starting with $1000.  This money should be in a savings account which is readily available, but which is set aside for emergencies only.  Stocks, bonds, and even CD's are not good options for an emergency savings account, because they are not readily available, or may fluctuate in value.

So what should you do if you don't even have $1000 available to set aside for emergencies.  First, you must begin by looking for any opportunities to tighten up your spending. If you are not already living by a budget, see the Budgeting category to read articles on how to get started!  

Save every receipt and write down every cash purchase for at least one month, then carefully review your expenses to look for areas where you can cut back.  A few dollars here and there can really add up quickly!

Ideas to Fund Your  Emergency Savings Plan

The following are ideas for cutting back on your spending to fund your emergency savings account. These don’t have to be permanent decisions, but if you are trying to save money for emergencies, try to go without a few of the following expenses for at least a couple of months.
  1. Shop smarter for your groceries. Plan your meals around store specials and coupons, make out a weekly menu and buy only the things you need for those meals.  Look online for coupons or clip them from the newspaper.  Stock up on nonperishable foods when they are on sale.  Drink water instead of juice, soda, or expensive teas.
  2. Cut out some “extras.”   If you love your coffee, try making it at home instead of splurging for that expensive gourmet cup at your favorite coffee shop. Drink water instead of soft drinks when you do go out to dinner. Bring snacks from home instead of spending money at the office vending machine.  Try brown bagging it for lunch instead of eating out.
  3. Re-evaluate your “essentials.” Think about the everyday common products that you purchase. What about salon services such as expensive hair colors or manicures and pedicures?  Could you do this at home to save some money? Do you really need that expensive brand name cosmetic or will one from the drug store suffice?  What about other services such as lawn care or dry cleaning?  Could you mow your own lawn or hand wash some of your clothing instead of dry cleaning?
  4. Buy generic. drugs.  Some generic store brand products are every bit as good in quality as the name brands. Try the generic or store brand of toiletries, cleaners, or paper products. Talk to your doctor and pharmacist about generic options for your prescriptions
  5. Down-size service plans and insurance. Evaluate cable or cell phone packages and see if there is a cheaper package that will meet your needs. Look into bundling your packages for cable, phone, and Internet services. Call you insurance agent and evaluate the impact of increasing deductibles on home and auto insurance policies on your premium costs.  See the Insurance category for more information about Insurance.
  6. Avoid “impulse” buys. Even the little purchases, such as magazines near the register can add up!  If you really want to read that issue, check out copy from your local library.
  7. Entertain at home. Eat out less frequently, and cook or entertain at home instead.  Invite friends over for a potluck dinner. Check movies and books out from the library, rather than renting or buying them.  
  8. Sell your extra stuff. Clean out the basement, attic, garage, and closets. We all have extra things we never use any more. Sell them on eBay or Craigslist or have a garage sale.  You may also be able to sell gently used clothes, sports and excercise equipment, and furniture at a higher price through a consignment store.
  9. Don’t spend "bonus" money.  Instead of spending more when you receive a tax refund, bonus, birthday money, or any extra money from a raise, put it in your emergency savings.
  10. Save your change. Empty your pockets or purse of coins each night. You'll be surprised at how this adds up!