Don’t Wait: Start Building an Emergency Fund Now

These 3 tips will help you get in a savings groove so you’re covered for the unexpected.

Elements such as rising healthcare costs and natural disasters can put people at financial risk. Using credit cards to pay bills may quickly build large high-interest debts. While trying to recover from a financial emergency, rapidly increasing debt becomes yet another major hurdle.

An emergency fund provides a cushion to stay afloat while recovering from unexpected situations. According to financial experts, everyone should have enough savings to cover 3-6 months of bills. This cushion can help people to weather the storm and come out of a financial crisis debt-free.

Tracking your expenses is a good place to start building your emergency fund

If you don’t already have an emergency fund in place, it is suggested that you start working on one now, before an emergency strikes. Use these 3 useful tips to make your emergency fund efforts successful.

1. Keep Track of Spending

Creating a budget isn’t all that complicated. Jot down categories of monthly spending and amounts you spend. List all fixed-amount monthly bills: rent/mortgage, utilities, credit card debt, etc. List monthly payments with varying amounts: groceries, eating out, clothing, gas, etc. Estimate what you really spend, not what you’d like to spend. Don’t forget coffee, dry cleaning and other small daily items; many people discover they’re spending much more than they think on these “discretionary” items. Compare the total actual spending to your take-home pay. Hopefully, your income is enough that you can have extra money each month for your emergency fund.

Young mother takes a selfie with daughter, knowing she has a rainy day fund

2. Treat Your Emergency Fund like a Monthly Bill

In your budget, add a line for your emergency fund. If you don’t have excess income, try to find ways to reduce other expenses so you can start this saving habit. Put a fixed amount of your regular paycheck into a special emergency fund account; use payroll deduction or electronic funds transfer so it happens automatically each month. After you’ve met your emergency savings goal, keep going; start saving for college, retirement or other goals.

Father teaching his son how to repair a car

3. Keep Emergency Funds for Emergency Needs

As the emergency fund builds, it becomes tempting to use it for other desires: a vacation, new car or shopping spree. If you give in to temptation, you’ll be back in the same dangerous position if a real emergency arises. Instead, use your good habits to save money for these other opportunities. If an unforeseen event occurs, like a major car repair, an unexpected medical expense or a tree demolishing your garage, dip into the emergency fund. Then start saving again to replenish it.

We all hope and plan for everything in our lives to go right, but that doesn’t always happen. If you have set aside an emergency fund, you’ll be more prepared if the unexpected happens.

Saving

You earned it.
Now earn more with it.

Online savings with no minimum balance.

Start Saving
Online
Savings

Discover Bank, Member FDIC

Will Rising Interest Rates Impact Your Finances? Here's What You Should Know

Budgeting

Are You Making These 4 Common Budgeting Mistakes?

If these budgeting pitfalls sound familiar, there are steps you can take to get your finances back on track.

Read Article
How to Create a Budget (and 5 Budgeting Basics You Can't Miss)

Say hello to
cash back on debit
card purchases.

No monthly fees.
No balance requirements.
No, really.

See Details

Discover Bank, Member FDIC

Family Finance

Budgeting for a New Baby? Babyproof Your Budget in 4 Steps

Congratulations are in order! Amidst the excitement of your new family addition, consider the following steps to get your budget ready.

Read Article
How to Make Planning a Kid's Birthday Party on a Budget a Piece of Cake

Grow into your future.

Our fixed rate CDs help you save for what's next.

Start Saving
Certificate
of Deposit

Discover Bank, Member FDIC

Retirement

Should Rising Interest Rates Affect Your Retirement Plans? A Step-by-Step Guide

A simple way to reach your goals.

Watch your savings grow with a CD.

Lock in Your Rate
Certificate
of Deposit

Discover Bank, Member FDIC