5 Ways to Build an Emergency Fund

Having an emergency fund.... Just close your eyes and picture that for a minute. Doesn't it bring a small measure of peace to your heart? Right now, we have our baby emergency fund ($1000) sitting in the bank along with a little extra we stashed away for some medical expenses. But that little emergency fund makes me relax a little.

I remember what it was like before we had our emergency fund started. EVERYTHING was an emergency! We ended up using credit cards for things like car repairs, because we didn't have the cash to pay for them. Now that we have the emergency fund, we seem to have fewer emergencies. When we do have an emergency (like an unexpected car repair), we can borrow the money from ourselves, restocking our emergency fund as we're able.

But how in the world can you start an emergency fund, especially when money is tight? I know that many families are living paycheck-to-paycheck right now, making the thought of saving $1000 look highly unlikely. Been there... done that... have a couple of debts left to pay off to show for it!

Here are five creative ways to start saving money and building that baby emergency fund.

1. Eat breakfast at home, and pack a lunch.
   
   This one is near and dear to my heart, because it's the one that I'm SO guilty of! I don't usually remember to pack my lunch the night before my work days, and I'm in such a hurry in the morning that breakfast is whatever I can grab. When I'm really running late, you'll find me driving through McDonald's or stopping at a convenience store for some breakfast and then eating fast food again for lunch. Not only is this unhealthy for me, it's unhealthy for our budget!
   
   If I can remember to pack lunch the night before, I can save about $5 by not eating lunch out. My packed lunch does cost a little, but nowhere near what I spend at the drive-thru. If I can remember to put something out for breakfast, I can avoid spending another $5 in the morning. That's $10 for every day that I work. I only work three days a week, but that's $30 per week x 52 weeks in the year.... or $1560. Sounds like an emergency fund to me!
   
   


2. Don't discount the small stuff.
   
   While it might be nice to stop by the bank and deposit $1000 all at once, that's not usually the way that a baby emergency fund is funded. Instead, it's funded $5, $10, or $20 at a time. If you can save an extra $5 at the grocery store this week, put it toward your emergency fund. Now you only have $995 to save. If you get a $10 rebate check in the mail, put it toward the emergency fund. Now you only have $985 to save. Chipping away at the $1000 is much easier than trying to come up with $1000 all at once. You'll be amazed at how quickly those little deposits add up!
   
   


3. Designate gifts for the emergency fund.
   
   Do you have family members who buy you gifts for your birthday or Christmas? Let them know that there's nothing you'd like better than to have an emergency fund. Maybe they would be willing to give you a cash gift instead, and you can add that your emergency fund. I know that there's nothing I'd like more than to help a friend or family member gain a little peace of mind by contributing to their emergency fund in lieu of a gift.
   
   You can do this with your spouse too, as long as both of you are willing. Skip the gifts for Valentine's Day, Christmas, and birthdays for a short time, and put what you would have spent toward your emergency fund instead. If your spouse isn't a fan of shopping, this is also a nice reprieve!
   
   


4. Sell some stuff!
   
   Oh, I know we all have a lot of STUFF. There's stuff we don't even remember we have! If you're really serious about building your emergency fund, why not sell some stuff? You could have a garage sale or yard sale if the weather permits. You could list some of your items on eBay or Craigslist. Maybe there's a consignment store near you. Why not drop off a few things to sell? You may not make a fortune, but wouldn't it be nice to earn $100 or $250 toward your emergency fund? Plus, you can declutter your house at the same time!
   
   


5. Pare it down, even if it's just for a short time.
   
   I'm talking about lifestyle here. Do you have cable? If you pay $50 a month for cable and you did without it for 6 months, you could put $300 toward your emergency fund. (You could probably also get a sweet deal for re-signing up with the cable company in six months!) Can you do without your landline and just use your cell phones? Can you cut down the number of times you eat out? Can you take a two-month break from shopping for anything but groceries? If you start to make a list of the things that you can do without - even if it's for a short time - you might surprise yourself at how much you can afford to put toward an emergency fund.

Having an emergency fund is so important. I can personally attest to the peace of mind that comes from knowing that we have that little cushion between us and life. Once we have our last two debts paid off, we'll be aggressively saving toward our regular emergency fund (three to six months of living expenses). I can't wait!!

Do you have any other ideas for creatively funding an emergency fund? Do you have an emergency fund? I'd love to hear your thoughts on this topic!

This post is linked to Works for Me Wednesday hosted by We Are THAT Family and Frugal Fridays hosted by Life as MOM.