How to Rebuild Your Emergency Fund

Ah, snap. Things were going so nicely. You felt like you had your life together. And then . . . BAM. Your water heater busts, your car manages to get two flat tires, and you crack a tooth . . . Why?

Thankfully, you have an emergency fund. It feels good to pay cash to fix the problem, but then your emergency fund is drained—and now what?

Now, you go all Rocky Balboa on it and keep moving forward—no matter how hard you got hit. (Aka you rebuild that emergency fund.) Here’s how.

How to Rebuild Your Starter Emergency Fund

The starter emergency fund is $1,000. This is Baby Step 1 of the 7 Baby Steps—the plan anyone can use to take control of their money. When you have to dip in for an unexpected expense, use these tips to help you get back to $1,000 in savings pronto. (Don’t worry. We’ll cover how to rebuild your fully funded emergency fund in a moment!)

1. Make a budget.

If you don’t already budget, you should. It’s the best way to realize where your money is going so you can start planning where you want it to go.

And right now, you want a big chunk of your money to go into savings, right? Get on a budget so you can make that happen.

Might we suggest our free budgeting app, EveryDollar? We might. And we just did.

With EveryDollar, you can budget on your desktop or on the go with our mobile app. You can even use the funds feature to keep track of your progress.However you budget, make sure you’ve got a line item to intentionally put money into your emergency fund.

2. Track your spending.

To make a budget work, you need to track your income and expenses—everything that comes in and goes out. It’s the only way to know how much you have left in each budget line so you don’t overspend. And if there’s anything extra in a budget line at the end of the month, move it over to your emergency fund savings!

To keep up with it all, try the premium version of EveryDollar. It makes tracking your spending super simple because it connects to your bank and streams those transactions right to your EveryDollar budget. All you do is drag and drop them to the right budget line. Boom.

3. Pause your debt-payoff journey (Baby Step 2).

You’re in Baby Step 2 and you’re busy punching debt in the face. You know we love that! Paying off debt with intensity is our jam.

But if you go back to Baby Step 1 to fill up your emergency fund again, temporarily pause your debt punching. Make the minimum payments on all your debt until your savings is back at $1,000. Then, go right back to being all in on your debt-payoff goal once again.

4. Go on a short-term spending freeze.

See if you can go an entire month without spending money on anything you don't actually need. This is a fantastic way to quickly rebuild your emergency fund.

So, be your own barista, wear those old wedges, and have a movie night at home. Gather up all the money you save and take it to the bank. Literally.

5. Cut out some extra expenses.

Some spots in your budget might be a little . . . fluffy. Cut the fluff. Like one of your three TV streaming services (the one you haven’t logged into for months). Your superhero sock of the month subscription box. The maid service. Restaurants. (Don’t hate us! We aren’t saying to never eat out again. It’s short term, friends.)

Are you prepared for life’s emergencies? Learn how to get there with Financial Peace University.

Remember: The goal here is to rebuild your emergency fund. So, cut out some spending for now. You might even realize you don’t miss some of it one little bit.

How to Rebuild Your Fully Funded Emergency Fund

If you’ve had a much bigger unexpected expense hit and you need to rebuild your fully funded emergency fund (Baby Step 3), you can use any of the tips above and some below as well.

A fully funded emergency fund is a storehouse of savings for 3–6 months of expenses that can keep you afloat in case of a big emergency—like job loss or a medical expense. You’ll be working on this fund longer and may want to take bigger measures to save up fast.

1. Sell stuff.

You’re probably surrounded by things you don’t really use: an extra television, a surplus sofa, unused electronics. Get selling! Go online to places like Craigslist, Poshmark, thredUP or your local page on Facebook Marketplace.

Or dust off those folding tables and make some signs for a good old-fashioned yard sale.

You’ll clear out some of the clutter in your life and earn extra cash to stash back into your emergency fund.

2. Find a side hustle.

If you need more money, make more money. Get yourself a side hustle (aka an extra part-time job). Delivering pizzas used to be the best, quickest, easiest way to do this. Now, it’s one of many simple options.

You can pick up delivery jobs for Amazon Flex, Uber Eats, Grubhub, Postmates, Shipt, or a grocery store near you that offers food delivery services.

Uber and Lyft are good if you love driving and love people. Just imagine the conversations you’ll have and the interesting people you’ll shuttle around—for pay, no less!

And don’t forget about all the ways you can profit from your talents. Tutor, give music lessons, babysit, pet sit, dog walk or design birthday invitations. People are paying for these services—they might as well pay you!

You can rebuild your emergency fund quickly. And maybe you’ll discover you want to keep the side hustle to point that extra income toward other financial goals.

3. Save on groceries by meal planning.

You can cut a quick $100–300 off your monthly grocery budget just by meal planning. Yes, it takes some work. After all, it’s called meal “planning” and not meal “showing up on your table without effort.” But that extra hundred or three hundred a month is no joke.

Just like your budget gives all your money a job, meal planning gives all your food a job. When you make a meal plan, you’re buying only what you need for the week.

It keeps you accountable to yourself when you’re walking by all those beautiful shelves in the grocery store with promises of delicious snack times and lunches your kids will tell all their friends about on the playground.

Make a meal plan by mapping out what your family will eat all week for breakfast, lunch, dinner and snacks. Save even more by planning these things around what’s on sale that week at your favorite discount grocery store. Make a list. Check it twice. Then, shop that list—and don’t stray from it.

Grocery shopping isn’t a Sunday drive with no place to be. Don’t take a side road. Stick to the list. Your wallet will thank you—at least a hundred times.

4. Cut the cable.

Cable TV can cost you anywhere from $50 and $150 per month.¹ But what if you could get even more television entertainment for less money? You. Can.

Trade in cable for a much lower-priced streaming service—like Hulu, Netflix, Amazon Prime Video, YouTube TV, Sling TV . . . the list goes on.

Even if you only pick up two of those options, you’ll save money and still have tons of choices available to you and yours.

5. Check your tax withholdings.

If you normally get a large tax refund every year, it's time to adjust your paycheck withholding. That way, you'll bring home more money in your paycheck every month.

Use that money to rebuild your emergency fund so you have enough to cover the next "life happens" event. Once you get that back to full capacity, keep using that money (which you used to loan to the government at no benefit to you). Put it to work on your current Baby Step.

6. Think about pausing your retirement investing.

This one might seem counterintuitive since investing in your financial future is such a big part of winning with money. But you could (temporarily!) pause investing 15% of your income in retirement (Baby Step 4) while you rebuild your emergency fund. It’s a way to give a quick, big boost to this goal, and you’ll be back to prepping for your retirement again in no time.

7. Consider downsizing your home or apartment.

Whoa. Did we go too far with this one? Hang with us a moment. We aren’t saying you should move your family of six to a one-bedroom apartment.

But give this idea of downsizing (or down-pricing by moving to a different neighborhood) some thought.

When we talk about budget percentages, our suggestion for the housing category (rent or mortgage, plus HOA fees, insurance and PMI) is no more than 25% of your take-home pay.

If you’re spending more than that or if you’re right at this amount but would love to free up lots of money in your budget, a move could be the way to do it.

It might mean giving up some amenities (do you even use that puppy spa?) or that second bonus room (the one that collects all the stuff you’re planning on selling in the next garage sale anyway), but it could also mean quickly rebuilding your emergency fund and gaining peace of mind with your finances.

8. Switch to term life insurance.

The whole life vs. term life insurance debate can be a hot one. We’re team term life. Why? Many, many, many reasons.

We’ll cut to the chase, though. First of all, you pay on a whole life insurance policy for, well, your whole life.

That means that even after you’ve built up your retirement savings, you’ll still be paying on an insurance policy you don’t even need anymore because your investments are your insurance now! No, thank you, whole life.

Secondly, term life is a better financial deal.

We ran some numbers through one of our online calculators. Whole life costs more. Every. Month. That’s right: No matter what age you are, you can save a whole lot by ditching whole life insurance. If you're around 30 and switch to term life, you'll save about $150 a month! If you're 45 and switch, you'll save around $270.

That’s a quick chunk of change to put toward rebuilding your emergency fund. And when the emergency fund is back in action, that’s extra monthly money to throw at saving up for retirement, paying off your mortgage early, or setting up a college savings plan for your kids.

Go switch to term life insurance right now—or after you finish reading these last couple paragraphs.

9. Know it’s okay to say no.

Oh, the power of the word no. We should all use this power more often.

Should I have a third helping of that chocolate molten lava cake with a side scoop of vanilla ice cream? No.

Should I get a perm and tease my bangs? Surely that ’80s hairstyle will make a comeback. No.

Should I buy these tickets to the polka rock music festival? It’s not really in my budget, but . . . No.

Enjoy that first helping of cake, leave that ’80s hair where it belongs (in the past), and don’t spend money outside of your budget. This will help you rebuild your emergency fund and make better money decisions in life in general!

Make It Easy to Rebuild Your Emergency Fund

Listen, we know the budget feels a little tighter than usual when you’re trying to rebuild your emergency fund, so you’ll be saying the magic word no more often than usual. You’ll be working more hours. You’ll be making dinner at home.

But that’s okay. It’s for a season. And what you’re really rebuilding here is security against what could come and empowerment over your money.

That’s worth any season of being scrappy or sometimes stingy with your cash.

You can do it!

Log in to EveryDollar today. (And if you don't have EveryDollar yet, then get started!) You’ll see where you can trim your budget, plus you can set up a fund to watch all that rebuilding progress in action.

And we’ll say it again so you remember through this whole season: You can do it!