21 Easy Ways to Start an Emergency Fund Even if You’re Broke

As adults (and even young adults), it’s our responsibility to prepare ourselves and our families for the future.

We cannot control the circumstances that occur around us which should be a good enough reason to store emergency supplies, including money.

An emergency fund is a certain amount of money that an individual saves or sets aside in a private account for any financial emergencies. Oftentimes we can’t anticipate what life may throw our way but we should be ready for anything, whether its a medical emergency (hospital bills can go up really fast), major car fixes, home repairs or appliance replacements, natural disaster evacuations and damage, and perhaps the worst of all, becoming unemployed. Ideally, your emergency fund will be enough, or at least a good start, to paying major unforeseen bills.

It’s wise to set money aside every month to go into this fund, rather than having to take out a high-interest rate loan when an emergency strikes. In more drastic scenarios, your house can end up in foreclosure and you can become bankrupt.

I think saving money now will allow you to keep what you’ve worked so hard to earn your entire life. Many people are living on such a tight budget already, that an extra few thousand dollars in the bank will actually lead to a healthier life by relieving stress and anxiety.

Does this sound like you? If it does, then hear me out real quick.

Did you know that an estimated 49% of Americans are living paycheck-to-paycheck? Did you also know that the average American spends about 90% of their income?

The United States is a high consumer country, so it may not surprise you that about eight in ten Americans are in debt.

I’m not sharing these statistics to make you think you’re stuck in this lifestyle forever but rather to encourage you. You can start overcoming the financial burden that’s been placed on you no matter what situation you’re currently in. (I’m not trying to assume you’re one of the 80% but if you are, there’s a silver lining).

Every person, even those making minimum wage, can start an emergency fund. Follow the steps outlined below. Even if you can’t follow all of them, start with a few and work your way up with time.

In order to establish budgeting practices, first you should determine how much money you need to save up. Some people choose to save a fixed amount, which is a good idea if the fixed amount is relatively high.

For starters, determine how much you spend in living expenses every month. Initially you want your emergency fund to cover a minimum of three months’ worth of living expenses.

Say your monthly fees amount to $4,000. Your emergency fund goal should begin at $12,000. That’s a huge number, especially if you’re paying off debt as well but look towards the goal and work towards it as best as you can. Prioritize reaching the goal before wasting your money on things you really don’t need (I'll highlight some tips to help you with this in a minute).

Once you’ve reached the three month goal, continue saving until you’ve reached a six-month goal. In this example, it would be $24,000.

If you are the sole bread winner in your home, consider the option of setting your goal to nine or twelve months.

The time it takes one person to save up for an emergency fund can drastically differ from another person. Our goals will vary because our incomes and financial demands are very different. Our rate of saving will very much depend on how aggressive each person is in reaching their goals.

My recommendation is to set goals you can easily reach, at least in the beginning. Saving money is much like dieting. It’s gonna be easy the first week and you’re gonna be pumped. But one month later, you may get discouraged and try to bury your hopes of reaching those goals or even wonder why you started.

Begin with small milestones and increase them as you go. Keep track of your progress. Don’t lose sight of your goals and always (even in small steps) run toward them!

How’s that for free life advice!? 😉

Ok let’s get to the steps.

1. Talk kindly to yourself.
Ever notice your words becoming self fulfilling prophecies? There’s a whole science around it and I agree with it completely. I have caught myself on multiple occasions joking around (and sometimes being serious) saying to a friend or relative, “Nah, I’m poor.” Then my mind would stop me for a second and think, “Why are you declaring such a thing?”

Although the world practically revolves around money, it’s okay not to be rich like everyone wants you to believe. Whatever your financial situation is right now, be thankful that you have an income and never talk down to yourself again. Speak positively about your finances and watch your financial burdens become less about how little you have and more about how you can spend what you have wisely. Attract wealth to your life (I don’t mean that in an arrogant way at all- always strive to be generous with your money).

2. Get a bank account specifically dedicated to your emergency fund.
Ask your bank which type of account will allow you to accrue interest with the money you save there. Make sure to get clear information on the terms of the account, such as if the bank requires you to have a minimum balance. Hopefully you can avoid this and other fees.

3. Split your direct deposit checks.
If your employer allows you to do this, designate a percentage of your paycheck (even if it’s as small as $25 biweekly) to go towards your emergency fund account. If you don’t see the money enter your main bank account, you’ll be less likely to spend it.

4. Make a list.
Grab a pen, paper and your significant other (or whoever you share a home and bills with). Together, write down all your monthly expenses. Yes, it may get tedious and you may not have exact numbers for everything but be as thorough and precise as possible. Then, take a highlighter to the paper and highlight everything that is absolutely necessary (light, gas, water, mortgage…so on and so forth). Whatever is left unhighlighted is where you can start adjusting your budget.

5. Downgrade your cell phone plan.
There’s free access to WiFi in most restaurants, coffee shops, possibly your workplace and very likely your house. Since smartphones work just fine with WiFi, choose a cheaper phone plan with less data and only use your data when you really need it. In my family, we split 2 GB with three people and we usually have enough data that rolls over to the next month. Discipline yourself if you have to but I know from experience that it’s doable. Call your phone provider and ask them if there are any available discounts. Oftentimes they will give you a promo deal to guarantee your business. Any money you save here should be sent to your emergency fund.

6. Cancel your television premiums.
I know people who have cable, Netflix, Hulu, and every other TV option you can think of. How much TV can you possibly watch? When I was a child, my parents canceled cable so all we could watch was movies. After a while, we stopped making time for TV because we got busy doing other things. If you’re not willing to give up your favorite shows, compromise and pick one TV provider. If you have WiFi and Roku you can watch a lot of channels for free (such as PBS kids and the Smithsonian channel), so that’s a great educational option. Any money that you save from cancelled premiums should go straight into your emergency fund.

7. Get rid of subscriptions you don’t use.
Think of all the money you're spending in monthly memberships: apps, digital news, magazines, the gym, etc. Cut back on the memberships you’re not actively using. Try giving up your gym membership and working out at home or jogging around your neighborhood. Last summer I gave up the gym (even though I was an avid go-er) and started a hiking club in my community. I have gained new friends and got to hike all over the beautiful mountain town I live in, all the while saving $40 a month (it doesn’t sound like a lot but over a period of a year it adds to $480). The money that is no longer going to memberships, should start going into your emergency fund instead.

8. Enjoy a cheap date.
If you're like me, you love outdoor concerts, shows and movie showings. Many cities offer this kind of entertainment for free. In the last few years, it has become popular to have “Movies in the Park”. You can take your blanket and lawn chair and enjoy a movie under the stars. Bring your own popcorn and you’re really budgeting!

Near my town there’s an outdoor amphitheater which offers free performances at least twice a week throughout the summer months. Find out what’s available in your city and take advantage of events and activities. Just because they’re free doesn’t mean they’re cheap. (I got to see Broadway’s Tarzan and Broadway’s Beauty and the Beast at the Redlands Bowl. Both were free shows and both were absolutely amazing.) Cut down your “entertainment budget” a bit and put the remaining savings into your emergency fund.

9. Get a library card.
Libraries are amazing. Not only do they offer an endless supply of books and movies, but they also have free classes. My mom learned English at the library. My best friend takes her daughter to free Sign Language classes at her local library. And I’m scheduled to start free coding classes at mine. Seriously, get your kids (or yourself) involved in the activities offered by your local library and before you purchase a book from Amazon, check if you can rent it out instead.

10. Give up expensive habits.
Examine yourself and determine which immediate habits you’re willing to give up for the security of your future. Is it a weekly manicure and pedicure, a new video game, or weekend outings with your friends? Some habits are more challenging to give up than others, such as alcohol, cigarettes and recreational drugs, but doing so can dramatically improve your health and overall quality of life. Do yourself (and your wallet) the favor of letting go of unhealthy dependencies and habits you can’t really afford…your emergency fund will thank you!

11. Cook most of your meals at home.
Eating out has become so commonplace that we often forget how expensive it really is. Meal plan subscriptions (like Hello Fresh and Plated) are very expensive too. Make a meal plan and do your own grocery shopping. You’ll save a LOT of money this way. Prepare your meals and snacks to take to work, rather than dining out during your lunch break.

12. Buy groceries on sale.
Maximize your savings at the grocery store by purchasing only what’s on sale. Many stores have apps where you can “clip” coupons at the touch of a button. It takes almost no time and will save you a nice chunk of money when all the savings have been applied. Also, store-brand items are typically cheaper and identical in quality to the fancier brands. Check the labels first but you can usually get away with the store’s knock-off brand without compromising flavor or quality. Last grocery store tip is this: quit buying large amounts of processed foods. Some processed foods may be very cheap but your health will likely be affected in the future (you may have to pay a higher price in hospital visits and medication later on). Prioritize fresh foods in your diet.

13. Skip your precious morning latte.
Most people own a coffee machine or a tea kettle. Rather than going once (or twice) a day to the coffee shop, make your coffee at home and take it to work with you. A latte will cost you roughly $3 (on the cheap end). If you drink one latte a day, you’re spending a minimum of $1,095 without the tip. If it’s a huge struggle for you because no one makes a latte like Starbucks, then treat yourself a couple times a week instead. You’ll still be saving a bunch of money which will quickly add up in your emergency fund.  

14. Go on a minimalism-spree.
Not too long ago I watched a movie called “Minimalism.” The movie motivated me to get rid of at least 30% of the things in my closet- things that I hadn’t touched in years. It felt SO freeing! I gave everything away but if you have things of value (not limited to clothing) set up a social media group or have a garage sale and sell everything you don’t want. Whatever you earn, add it to your emergency fund.

15. Finish half-used products.
Rather than buying new bottles of shampoo, or cereals, etc, opt for finishing whatever is left in the bottle or package so it doesn’t go to waste.

16. Take public transit or bike to work.
You will be saving a good chunk of gas money by not driving to work every day. Going by public transport might take you about the same amount of time as driving and you won’t have to find a parking spot or sit in traffic. It’s a win-win for both the environment and your emergency fund!

17. Turn off the heater and A/C when you’re not at home.
There’s no point in leaving the heat or A/C running if you’re not home. Leave your thermostat off while you’re away to save a maximum amount of money.  Smartphone users can now control their thermostat from their phone so they can turn on the heater or A/C right before getting home. Perhaps it’s something worth investing in.

18. Give more meaningful gifts.
When someone has a birthday, rather than giving them several things, get together with friends so everyone can pitch in for a better, more meaningful present. This assures that you spend considerably less on a gift that they may not even want in the first place. During Christmas, rather than purchasing several presents, do a Secret Santa exchange where you’re only responsible for one gift. Stick to your gift budget and browse online to see if you can find a better deal than at the store.

19. Save all your extra money.
Sometimes it’s good to be stingy with your savings, especially if you’re trying to save money and get out of debt. No matter where the extra money comes from, sometimes it’s gifted, sometimes it’s a raise or bonus from work, and hopefully once a year it’s a refund from the Federal Tax Reserve. Save all of it in your emergency fund. These sometimes unexpected amounts of money will help you reach your emergency fund goals much faster!

20. Get a second or part-time job.
I bet no one likes working overtime and perhaps a second job will make you miss out on a few fun events but in the long-run, giving up some freedoms now will pay off and give you financial freedom in your future, especially if you’re paying off debt. Do whatever it takes to become a little bit more aggressive in your debt-paying strategy. If you’re overwhelmed with work, kids, and a busy routine, try to take advantage of one-time job opportunities, such as watching your neighbor’s pets while they’re on holidays, or an afternoon of babysitting.

21. Shop around for cheaper auto and homeowners (or renters) insurance.
Insurance companies offer different deals with respect to your driving record (auto insurance) and where you live (home insurance). Ask your neighbors which insurance companies they use.  Perhaps they could offer you recommendations so you can find a better deal than what you currently have. Shopping around online can also offer you some leads. If you are able to lower your insurance costs, invest your savings into your emergency fund rather than pocketing it. Every dollar amount counts!

There you have it! I believe an emergency fund is not only possible, but necessary, for every person and home. I’m positive that anybody who is determined to achieve their goal can make it happen! It really comes down to having a positive mindset and strong discipline in spending habits. I’m sure many people are capable of living below their current means but budgeting and cutting back on unnecessary spending is key.

Maintain the vision of your emergency budget vivid in your mind. Keep track of your accomplishments so you don’t lose sight of how far you’ve come. There are many budgeting apps you can download to help you track your spending, save money and get out of debt. Mint, PocketGuard, You Need a Budget, GoodBudget and Wally are just a few.

Once you have reached a goal, continue to strive for the next milestone. It’s obviously better to have more money saved than less, so even if you’ve surpassed your goals (which I earnestly hope you do!) keep going and teach these skills to someone you love.

Did I miss any budgeting tips? Let me know in the comments below!