Emergencies \u2014 we don\u2019t want to think about them, but life doesn\u2019t always follow our plans. One of the most important ways to protect yourself financially is to build an emergency fund. <\/p>\n\n\n\n
While you may be able to take out a loan or use a credit card in a pinch, cash savings help you cover your expenses during an emergency \u2014 even an extended one \u2014 without digging yourself into a hole. <\/p>\n\n\n\n
This post will show you how to build one \u2014 with tips to make it easier than it might look.<\/p>\n\n\n\n
See how Quicken helps you build an emergency fund. An emergency fund is money that you set aside to live on if you ever need to and that you can get to easily during a crisis. Use it as your first line of defense after a medical emergency, a lost job, cut hours, or any crisis that affects your finances. <\/p>\n\n\n\n Unlike retirement funds<\/a>, the goal here isn\u2019t to grow your money through long-term investments. Instead, you want to keep your emergency fund in a secure, short-term account, such as a savings account \u2014 one that lets you grab your cash when you need it and that won\u2019t drop in value based on changes in the stock market.<\/p>\n\n\n\n Like many long-term financial goals, the best way to build an emergency fund is to break it down into simple questions and steps. These four cover everything you need.<\/p>\n\n\n\n The general guidance is to build up at least three to six months\u2019 worth of your expenses \u2014 which means you\u2019ll need to figure out how much that is.<\/p>\n\n\n\n Start by listing all your necessary expenses<\/a>. If you aren\u2019t using an app like Quicken Simplifi<\/a> that lets you see them all in one place, you\u2019ll need to work them out by hand. Let\u2019s break it down even more to help you find them all:\u00a0<\/p>\n\n\n\n Strictly speaking, some expenses might not be necessary, but be realistic about what you\u2019ll need during an emergency. Things like looking professional at work (or when you\u2019re interviewing) matters. <\/p>\n\n\n\n After you\u2019ve filled out your list, add up all your monthly expenses and multiply the result by three, and then by six. Aim to build up an emergency fund amount that falls somewhere in that range. <\/p>\n\n\n\n If your total goal feels completely out of reach, don\u2019t worry \u2014 keep reading. Every emergency fund starts out that way. The trick is to make your first goal smaller and build up to it. <\/p>\n\n\n\n Building a full emergency fund takes time, especially if you\u2019re living paycheck to paycheck. A lot of people are these days! To stay motivated, start with an easier goal of $500 or $1,000 \u2014 enough to get through common setbacks. <\/p>\n\n\n\n Add that first emergency fund goal to your budgeting app<\/a> \u2014 or add it to your spreadsheet if you\u2019re managing your money by hand. The important thing is to track your progress to help you stay focused.<\/p>\n\n\n\n Next, look for ways to save more money<\/a> or bring more money in<\/a>. Both are great ways to make more progress on your goal.<\/p>\n\n\n\n Remember, making extra money<\/a> can sometimes be easier than cutting back. Whether you can take on extra hours, find a new contract job, or get going on a new side hustle, that extra push can help you reach your goal faster.\u00a0<\/p>\n\n\n\n See how Quicken helps you balance your bills and savings. It takes time and persistence to save up a full emergency fund. And, of course, a sudden emergency can drain your funds \u2014 forcing you to start all over again! While that can be frustrating, it also serves as a reminder as to why your emergency fund is so important. <\/p>\n\n\n\n If you\u2019re carrying a lot of credit card debt, one thing that can help is to pay that debt down first. The more you pay it down, the more you can use those cards again if you really need to \u2014 just remember not to close them. And once you pay them off, you\u2019ll have more money each month to put toward your savings.<\/p>\n\n\n\n Another thing that can help is to prioritize your savings. Instead of adding to your emergency fund after you do everything else, start putting that money away first \u2014 even before you pay your bills if you can. <\/p>\n\n\n\n Having trouble balancing your bills and savings? <\/em>Quicken Simplifi can help.<\/em><\/a><\/p>\n\n\n\n As you start to save, setting up a separate savings account can be a good idea, so your emergency fund doesn\u2019t get mixed in with the money you\u2019re spending every month. <\/p>\n\n\n\n While you\u2019re at it, look for an account with a high interest rate. Online savings accounts, high-yield accounts from credit unions, and money market accounts tend to offer higher rates than traditional checking and savings accounts. <\/p>\n\n\n\n Compare your options to find one with no fees and good rates. Every little bit helps!<\/p>\n\n\n\n If you want to build an emergency fund, the most important thing is to get in the habit of saving. Once you make it a habit, you\u2019ll start saving even more every time you get some extra cash \u2014 like a bonus at work or a great tax refund.<\/p>\n\n\n\n Not sure how much to save? One option is to go by the 50\/30\/20 rule<\/a> \u2014 using 20% of your monthly income to pay down debt or grow your savings. <\/p>\n\n\n\n What\u2019s easier, though, is to get a spending plan that\u2019s uniquely tailored to your specific needs \u2014 one that includes your savings, covers your bills, and makes it easy to spend the rest however you want to without breaking your budget. <\/p>\n\n\n\n That\u2019s exactly how we built Quicken Simplifi \u2014 to do all that automatically.<\/p>\n\n\n\n
\n Learn more \u2192<\/a><\/p>\n<\/div>\nWhat is an emergency fund?<\/h2>\n\n\n\n
How to build your emergency fund (and how much you\u2019ll need)<\/h2>\n\n\n\n
1. Set your goal: figuring out how much to save<\/h3>\n\n\n\n
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2. Saving your first $1,000 <\/h3>\n\n\n\n
\n Get started \u2192<\/a><\/p>\n<\/div>\n3. Building your full emergency fund<\/h3>\n\n\n\n
4. Where to keep your emergency fund<\/h3>\n\n\n\n
The key to building your emergency savings<\/h2>\n\n\n\n