Emergency funds provide peace of mind during difficult times. They act as a financial safety net, helping to cover unplanned expenses such as job loss or medical bills.
If you recently needed to tap into your emergency fund, you might be wondering how to build it up again. Remember, you shouldn't be afraid to use your emergency fund when you really need it. You saved once, and you can do it again, even if your budget is tight.
Here are three tips to help you rebuild your emergency fund and reach your savings goals:
Revisit your budget
In a financial emergency, it's important to focus on your essential living expenses, including food, housing, utilities and transportation. Take a look at your current spending habits. Are there any unnecessary expenses you can reduce to make more wiggle room for saving? For example, limiting dining out and canceling monthly subscriptions can make a big difference.
If you don't have a monthly budget, get started with a budget worksheet or Wright-Patt Credit Union's (WPCU) free budgeting tool Money Management. Listing out all your expenses will help you identify areas to save.
Challenge yourself to a short-term spending freeze
When you're trying to rebuild your savings, it can help to try a temporary spending freeze. The idea is to avoid buying any nonessential items for a week. Instead of ordering take-out, prep meals with the food you already have. Before buying a brand-new book, check your local library. Skip the coffee shop and try recreating your favorite latte at home. You'll see that saving a few dollars here and there can add up quickly!
Put any extra cash in savings
Ideally, your emergency fund will cover three to six months of living expenses, but what's most important is to start saving something today! Whenever you receive unexpected cash—even a small amount—put it in your emergency savings account rather than spending it. Any extra money, such as a bonus, tax refund or economic impact payment, can help you reestablish your emergency fund. If you have spare time, think about starting “side hustle" to earn additional income and boost your savings.
Wondering where to keep your emergency fund? A WPCU savings account is a safe place to grow your emergency fund until you need it. Click here to learn more about our available savings accounts. Consider scheduling automatic monthly transfers into your account to make saving even easier!
WPCU is here to help make life a little easier for you and your family during uncertain times. For more helpful tips, tools and advice, please visit our online Education Center.