How To Start An Emergency Fund | Where to Put Emergency Fund

Wondering how to start an emergency fund | where to put emergency fund? Here are some great tips on how much your emergency fund should be and where to put your emergency fund.

How to start an emergency fund | Where to Put Emergency Fund?

Wouldn’t you sleep better at night knowing you have money saved up in case something were to happen?

I bet you would stop worrying so much about money…

To be honest, you can completely eliminate the financial stress in your life by learning how to start an emergency fund.

Would you love to be able to have an emergency fund? But feel like you barely make enough money at your current job because you have to keep the bills paid?

As someone who is just like you, climbing my way out of debt, I’m going to give you the top saving tips to help you fund your emergency fund way faster.

This post is all about How To Start An Emergency Fund -which will be a total game-changer for your finances-

So, what is an Emergency Fund?

An emergency fund is cash that’s available for quick withdrawals…that’s it.

Having an emergency fund gives you a financial safety net between you and any unexpected expenses that you did not plan for in your budget.

Basically, it’s the money you save for a rainy day. It should cover your basic needs such as housing, transportation, food, utilities, and minimum debt payments, etc.

How much should you have in your emergency fund?

This is up to you, really. Financial gurus like Dave Ramsey suggests for you to start a baby emergency fund for $1,000.

And after you pay off your debt you should completely fund your 3-6 month emergency fund.

Other financial gurus, like Suze Orman, suggests you should have an 8 month emergency fund.

It’s not a one-size fits all kinda answer. You should evaluate your family needs and calculate that number.

First, figure out how much money it takes to run your household for a month.

That number should include any mortgage or rent payments, food, utilities, Internet, car payments, gas, insurance, credit card payments, student loans, any subscriptions like Netflix, Hulu, Amazon, etc.

You get the idea, try to come up with a number for how much money it takes to pay for all this.

Secondly, multiply you monthly expenses by 3 to 6 months and come up with your emergency fund number.

Those two easy steps will guide you on how to start an emergency fund. Then, we’ll talk about where to put emergency fund.

Build your rainy day fund the easy way…

“More than half of Americans (51%) have less than 3 months worth of emergency expenses,” according to a survey done in July 2021 from bankrate.com

Are you one of them?

I know I am. (Because I currently have 1 month of emergency fund saved up).

And I’m glad I’m not alone. Why is saving such a huge amount so intimidating?

Maybe because most of my paycheck is already going to most of my bills???

I noticed there’s not much room for me to save. And it’s a struggle to save the very little that’s left. I guess I get demotivated and I become impatient and want to throw the budget out the window.

To tell you the truth, I had to learn to save for my emergency fund BEFORE I would pay my bills or spend any money from my paycheck.

I now aim to save at least 10% of my paycheck. And transfer it right away into my emergency fund account.

And that’s how I’ve been able to build my starter emergency fund.

You can start by saving small amounts of money from each paycheck, even if you can’t commit to saving 10%. You can always start with stashing away $20 every single paycheck. And watch it build up into a massive emergency fund.

Remember, it’s progress over perfection. Focus on developing the habit of saving and not touching your emergency fund.

If you can build that willpower, you are golden. The rest is easy.

Here’s an Emergency Fund Tracker Printable:

Here’s a great example, you can break down your starter emergency fund of $1,000 into smaller more achievable saving goals such as $20 each paycheck.

To keep you motivated as you save your emergency fund, you should use a printable and color in each box as you get closer to your money goal.

Click here to download the emergency fund tracker printable for free and start saving.

Where to put emergency fund?

After you decide the amount you’ll contribute from each paycheck, keep the fund in a separate account. (Away from your regular checking account).

It should be at a separate institution, that way you won’t be tempted to spend the money in a moment of weakness.

You can open a separate free online savings account for this type of fund. I suggest you open up a high-yield savings account, so you can earn a higher interest rate while your money sits there.

There are several high-yield savings account such as Ally Bank, Marcus by Goldman Sacs, Alliant Credit Union, etc. You can compare rates at bankrate.com and choose the best account for you.

Don’t make the mistake of opening a regular savings account form your bank!

Because they hardly pay any rates at all (they usually just pay 0.01%) and sometimes they even require you to have a minimum of $500.

I remember banking with Bank of America, I had a checking account linked with a savings account and I always tried to keep at least $500 in the savings account.

But, I had to use up my savings for an actual emergency and you know what I did not have the money to replace it right away. So my savings account balance was below the $500 minimum.

Each time you get paid, just transfer $20 into your new Emergency Fund Savings Plan account until you reach your $1,000 starter rainy day fund.

So guess what Bank of America did?

They started charging me close to $10 penalty fee every month for not having the $500 minimum balance.

I was pissed…

I closed both accounts with Bank of America and started doing research to find better banking options.

And I was so GLAD when I found out about online high-yield savings account with no minimum balance. I’ve never had to pay bank fees again, phew!

(I wish I knew about this earlier in my journey, that’s why I’m sharing it with you now.)

{CHECKOUT: 7 Insanely Practical Money Tips For Anyone Who Is Ready To Improve Their Finances Now}

In conclusion…

An emergency fund can help you save your butt in case you loose your job, or get Covid, or aren’t able to receive a paycheck for a while.

It will give you peace of mind and you’ll sleep a lot better knowing you have money stashed away in case something were to happen. (You can still pay your bills).

You should be able to know exactly how much you should have in an emergency fund. And start saving your emergency fund today even if it’s only with $20.

And lastly, you now know where to put emergency fund. You can easily google a high-yield savings account and pick one that has zero fees!

Alright! That’s it! Happy saving!!!!!

You should be a pro at how to start and emergency fund | where to put emergency fund?

This post was all about how to start an emergency fund so you can start building one and be as prepared as possible against any unforeseen emergencies.

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