Emergency Fund: Build a Safety Net

Tips and advice for finding more ways to save.

Putting your cash into savings won’t do any good if it comes right back out.

Building an emergency fund is a crucial piece of your financial plan, but to get the job done, you need to define “emergency” correctly. Here’s what an emergency is not: regular insurance bills. The holidays. A car repair, if you have other means of transportation.

Draw a clear distinction between saving for emergencies and saving for anything else. Next, take concrete steps for creating that financial cushion:

  • Set a monthly savings goal: A small, set percentage from your paycheck will get you going.
  • Keep the change. When you break a bill, put the change in a jar. Next stop is your savings account.
  • Cut back on costs. See which parts of your monthly spending you can trim.

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creditscoregaugeBuilding an emergency fund is one aspect of your financial health. Knowing your credit score is another. As a registered member, you can get a free analysis of your credit score and personalized tips for your finances.

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Trick yourself into saving

Saving money is easier if you forget you’re even doing it. Here are some ways to trick yourself into saving:
1. Automate it
2. Hide it
3. Name it

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Try new apps

Plenty of personal finance apps include some savings functions. We look at three apps that are focused on helping you fill your piggy bank little by little, in ways you’ll barely notice.

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Pay off debt

Here’s an eight-step plan of attack, including:

1. Save something before you pay anything
2. Get a handle on what you owe
3. Prioritize your debts

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Ways to save

Ways to save

Saving on expenses gives you the breathing toom to start building an emergency fund. Here are ideas for places to cut back:

Find the best cheap car insurance.

Scope out inexpensive cell phone plans.

Aim to lower your cable bill.

Use price matching to avoid leaving money on the table.

NerdWallet staffers took an unbiased look at savings accounts to round up those with consumer-friendly features and optimal interest rates. When you’re looking to stash your cash in case of emergency, find the account that suits you best.