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Three Ways to Grow Your Emergency Fund

An emergency fund will help keep your stress and anxiety levels from rising the next time an unexpected expense occurs.  I know this because there was a time that I didn’t have any extra savings and was very stressed because I didn’t know how I would pay my bills.  This stress was not good because it gave me stomach aches and kept me up at night. I never want to go through that again.  That is why having an emergency fund is very important to me.  

If you follow Dave Ramsey’s Baby Steps Advice, he suggests creating a $1000.00 emergency fund, paying off debt and then increasing your emergency fund to three to six months of expenses before you move on to investing.

Dave Ramsey Quote

Now that you are convinced that an emergency fund will help prevent sleepless nights, how do you fund it and watch it grow?

Tip #1: Spend Less
Granted, getting a higher paying job, a second job or even a big fat raise will give you extra money to put into savings.  But until that happens, you are stuck with your current situation.  Plus, to be realistic, more money doesn’t always equate to more savings.  For some, a bigger paycheck means a nicer car, a bigger TV, that trip to Hawaii….

So, in order to start saving money right away, the secret is to spend less.  You do this by figuring out  which “wants” are important to you and which you can live without.  For me, I need my internet connection, protein powder and exercise DVDs.  But I can go without manicures, salon hair coloring, $4.00 coffees, the over $100.00 per month cell phone plan and new clothes each season.  I even cancelled my DirectTV service on my home office TV and watch Netflix on it instead.  My point is, there is probably something in your life that you can cut back on or eliminate all together so that you can free up money to fund your savings account.

Tip #2: Treat Your Savings Account Like a Bill
I get paid every two weeks and on payday morning, I pay my bills.  I then fund my various savings accounts with either a fixed dollar amount or a fixed percentage that I decided on earlier.   Whatever money that is left over in my checking account is all that I have to spend until next payday.

Yes, there will be times when you have an extra bill to pay and you will be short on your savings account payment.  In that case, you should still put money into your savings account, even if it’s just $1.00.  The last thing you want to do is start missing your savings account payments because then you may just stop all together.  It takes discipline to save and you don’t want to lose your momentum just because you were a few dollars short one month.

The reason why I pay my bills first and savings second is so I never miss paying a bill.  And yes, I do know that financial experts often recommend doing the reverse.  It’s hard for me to pay savings first because sometimes I get too enthusiastic and put too much into my savings that I don’t have enough to pay the bills so I end up taking money back out of savings.  But do whatever works best for you as long as you get both your bills paid and your savings account funded.

Tip #3: Put “Extra” Money into Savings
Saving a portion of your tax refund, Christmas bonus and birthday money will really help grow your emergency fund.  Though I don’t have a hard and fast rule on it, it seems like every time I receive any extra money, the first $100.00 goes towards spending money.  Anything beyond that ends up in my savings account.  So, if someone gives me $100.00 for my birthday, I go shopping.  If I get a $1000.00 tax refund, I take $100.00 and go shopping and put the other $900.00 into savings or use it for debt reduction.  Some may argue that it’s wrong of my to spend that $100.00 on extras, but you also need to treat yourself to something special every so often.

I’m not a financial expert and my advice may not help you if you are in serious financial trouble.  But I do know that saving small amounts of money consistently and saving larger lump-sum amounts is how I was able to build a decent emergency fund.

Good luck on your savings goals and don’t give up on them.


P.S. I would love to connect with you on Twitter.  My handle is @2ndhalfdreams.  I hope to see you on there!

Photo Credit: © kavring –

{ 3 comments… add one }
  • G B February 12, 2015, 8:15 pm

    Thank for helping my debt snowball rolling, by using my photo for your article 🙂 I was actually listening to the DR podcast when I shot and edited that one, nice to see it used to illustrate just what I was inspired by. The photos are my way of building a second income, I hope you have success with your project!

    • Diana February 13, 2015, 4:34 am

      I still remember taking countless pictures of my piggy bank and none turned out good. Frustrated, I searched for photo websites and found Fotolia and I believe that yours is the first picture that I purchased. I’ve been using Fotolia ever since and all I can say is thank you so much for taking a great picture and letting people like me with very little photography skills use it. I hope that you’re doing well with debt reduction and making extra money with your photos. I’m very happy that you stopped by to let me know that you’re the photographer.


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About Diana

I am working towards creating a full-time income by selling on Amazon. It's a lot of work but very fun! If you're interested in selling on Amazon, be sure to follow my blog as I'll be providing you with lots of tips!

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