How to Save Money for an Emergency Fund? (Yes, Even Now)

Whether you lost your job or made the switch to remote work over the past year, you’ve likely thought about your finances more than ever during the pandemic. The past year may have made you reevaluate how much you’re spending and whether you’re prepared for the worst.

Fortunately, experts say that even amid a time of financial uncertainty, there are easy ways you can begin to build your own emergency fund to use in the future. Having this pot of money at the ready for a worst-case scenario can help you weather any financial storm in the future, even if you’re already facing some money troubles now.

What you can do right now?

Being stuck at home for months in 2020 probably had its perks, spending-wise. You may have spent less at restaurants, your gym membership was on pause, and you didn’t go to the movies. 

Now, experts say, it’s time to save that money as the starter cash for your future emergency savings fund.

Kumiko Love, creator of The Budget Mom, suggests holding off on paying off your debt, as well.

“Look at your discretionary income. You can always make an extra debt payment later. Reduce your eating out expenses. Use the money you would typically use for entertainment or gas money and set that aside for your emergency savings,” she says.

And before you rush to the grocery store with the cash you normally set aside for weekly purchases, see what you have at home.

“Do a fridge, pantry, and freezer inventory to access what your family needs and then make your grocery list,” Love says. “You’d be amazed at how many meals you have ready to make in your fridge and pantry. This will help reduce one of your necessary expenses.”

Start a budget

Once you’ve come up for air, spend some time getting down to the nitty gritty of number crunching. If you don’t already have a budget in place for your household, now’s the time to start one. Begin by assessing your current income and allocating it to your needs first.

Brian Walsh, a certified financial planner with SoFi, suggests using the 50-30-20 method of budgeting. That means delegating 50 percent of your income for needs such as housing, utilities, and food, 30 percent for discretionary spending, and 20 percent for your goals such as paying off debt or saving for the future.

“Building a budget is not only looking at what you’re spending but really asking yourself if it’s essential discretionary and just flat out waste,” he says. “Waste is easy to get rid of; discretionary is where it gets painful.”

Think about the difference between canceling a gym membership you haven’t used in months and deciding to forgo your monthly beauty subscription service. One is easier to give up than the other, but both should be on the chopping block for consideration according to the 50-30-20 philosophy, particularly if loss of income has you holding tight to every dollar.

If you’re a college grad still tackling student loan debt, you may still qualify for student loan deferment during the pandemic. If that’s the case, Walsh suggests setting that money aside as well.

“Treat it like you still have the payment, put it toward your emergency account, and use it to build that up,” he says.

Typically, experts recommend building an emergency fund with enough money for three to six months of living expenses.

“We say three months if you’re single with a steady job or you’re in a relationship and both of you are employed,” Walsh says. “We say six months if you’re single and your job is less steady or if you’re in a relationship and only one partner is earning an income.”

But something is better than nothing.

“Even if putting three to six months of expenses into emergency savings sounds daunting, you can at least try for $500,” Palmer says.

If you’re in a serious bind

If you’re one of the tens of millions of Americans who received one of the coronavirus relief checks, Ted Rossman, an industry analyst at, suggests putting it toward an emergency fund if possible.

“Those payments-$1,200 for most adults and $500 for children-will be extremely important for many households,” Rossman says. “You can also ask your lenders for breaks-most banks are offering relief on credit cards, mortgages, car loans, and more.”

If you’ve already filed your 2020 taxes and are expecting a refund, aim to put that money into your emergency fund, too. 

Whatever you do, try not to rely on your credit card for emergency purchases.

“That can be expensive, plus many banks cut credit lines and cancelled cards without warning during the Great Recession, and that could happen again,” Rossman says.

If you’re still wondering how you’re going to make ends meet, Equitable Advisor Tammy Butts says you need to take stock of your liquid assets and your retirement savings.

Butts suggests consulting with a financial expert before making major decisions about tapping into any investments you have during an emergency, as some will come with and without taxes, and others could come with penalties.

“I strongly recommend that you consult a financial professional, financial advisor, or CPA as they can direct you with this depending on your particular situation [and] age, how they are invested, tax status, etc.,” she says.

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