34% of Americans Say Building an Emergency Fund Is a Top Goal This Year. Here’s How

Key points

  • An emergency fund could bail you out if you lose your job or a major bill pops up out of nowhere.
  • You can build more emergency savings by cutting expenses, working a second job, and removing the temptation to spend your spare cash.

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If you’re feeling financially stressed these days, you’re not alone. Although the unemployment rate remains low, layoffs have been all over the news since the start of the year. Throw in persistent recession warnings and rampant inflation, and it’s easy to see how money-related concerns could be wreaking havoc on your mental health.

A good way to ease some of those concerns, however, is to build up your emergency fund. Ideally, you should aim to have enough money in your savings account to cover at least three full months of essential expenses. And for even more financial protection, you’re better off aiming for six to 12 months’ worth of bills in savings. That way, if you were to lose your job, you’d have a means of paying your bills without having to resort to credit card debt.

In a recent New York Life survey, 34% of respondents said that building an emergency fund was a big priority of theirs this year. But at a time when living costs are up due to inflation, boosting your savings is easier said than done. After all, how are you supposed to pad your emergency fund when a week’s worth of groceries now costs $20 more than it did last year?

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It’s true that saving money is not an easy thing to do right now. But if you take these steps, you may find that you’re slowly but surely able to build your emergency fund up.

1. Cut some spending

You may be living pretty frugally due to inflation and wanting to conserve funds. But if you examine your credit card bills closely, you might find a few expenses you’ve been spending money on needlessly.

If you can cut even one or two of those, that’s more money you can put into savings. And yes, those cuts can be as small as skipping store-bought coffee once a week, or canceling a $15 streaming service.

2. Get a second job

Maybe you got a raise at the start of 2023, but it’s not doing much for your finances. If saving money seems impossible based on your current paycheck, then your best bet may be to pick up a second job.

Now, this doesn’t mean you have to commit to a job that has you working an additional 20 hours a week. After all, you deserve to have time for things like household chores, self-care and, oh yeah, sleep.

But because the gig economy is so flexible, you might manage to find a side job that only has you putting in a couple of hours a week. And even if it only earns you a small amount of money, every little bit helps.

3. Put the savings process on autopilot

The less money you see in your checking account, the less you’re likely to spend. If you want to grow your emergency fund, arrange for a portion of each paycheck to move out of your checking account and into your savings account once that money arrives. That way, you’ll remove the temptation to spend it, since it won’t be available to you.

Of course, you could technically dip into your savings account to buy something like concert tickets if you really wanted to. But chances are, you’ll have a harder time raiding what’s supposed to be your emergency fund for that purpose than dipping into your checking account.

Building or growing an emergency fund isn’t easy these days. But it can be done. And the more you’re able to save, the more secure you might feel at a time when things seem iffy.

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