It's ironic when you think about it. People don't think about emergency funds until they need one. Don't let that happen to you. Here are some key steps to take to start – and to maximums – your emergency savings fund. (For more, read Building An Emergency Fund.)

TUTORIAL: Budgeting Basics

First some facts, a 2011 study from the National Foundation for Credit Counseling (NFCC) says that 33% of Americans don't have an emergency savings account – defined by the NFCC as an account with $1,000 or more stashed inside. Another study, this one from the National Bureau of Economic Research (NBER), says the problem is even more severe. The NBER says that only 50% of all American adults could come up with $2,000 "in a pinch."

The fact is, a big car repair bill, a medical emergency or the sudden loss of a job can trigger the need for such an emergency fund – and the smart money says that you'd better have one if financial trouble comes calling (and sooner or later, it usually does). So what's the best way to launch your own emergency fund campaign? (For related reading, see Why You Absolutely Need An Emergency Fund.)

Try these tips for starters:

Don't Bite off More Than You Can Chew
You know the old saying, "inch by inch, life's a cinch. But yard by yard, life is hard." So think small when you're starting a new savings fund. Even $25 or $30 per week is nothing to sneeze at. The important thing is to get in the habit of saving. Once you have a grip on that, tweaking the amount isn't as difficult as you might think.

Leverage Your Bank
Ask your bank to set up an automatic savings deduction from your paycheck. Economists call this "paying yourself first." Once you have a set amount (again, it doesn't have to be a big number) deducted from your paycheck and popped into a separate savings account before you know it, you won't even miss the money.

Add Your Emergency Savings Account to Your Budgetary "to Do" List
Here's a creative tip – treat your emergency fund as a regular bill that must be paid, just like your mortgage or utility bill. When you sit down to pay your bills, add "emergency fund" to your list. If you want to get really creative, invoice yourself and set a date every month where that "bill" must be paid.

Don't Spend a Raise or Bonus
There's no federal law that says you have to spend a raise, bonus or other financial windfall. Take the cash and put it into your emergency fund. Do that, instead of buying that new smartphone or those season tickets to the Knicks, and you'll sleep a lot better at night.

Put Your Spare Change to Good Use
Take a container, a big beer mug or empty pickle jar and clean it out. Then, every time you empty your pockets, put the change into the container. Do this for 30 days and you'll have a big addition to your emergency savings account. You can also make it a point not to carry $1 bills in your wallet or purse. Instead, stick those bills into your savings jar – they'll add up.

The Bottom Line
There's a reason financial professionals call them "emergency funds." You don't want to get caught if one happens to you – and your emergency fund is all tapped out.
If that happens, your personal financial situation could get all tapped out, too. (To help start a budget with an emergency fund, check out 6 Months To A Better Budget.)

Related Articles
  1. Budgeting

    How To Save Money When Moving

    Moving doesn't have to be as expensive as you think. Here are some great ways to save money on moving costs.
  2. Savings

    Easy Ways to Go Green and Stay Budget Friendly

    Social entrepreneurs recruit "skeptics" to team green, by providing economically efficient products and services that minimize consumers' carbon footprint.
  3. Budgeting

    The Hard Way We Pay For Convenience

    Convenience is a luxury. However, any cost-conscious individual should be aware of these ridiculous ways we pay for convenience and how to avoid them.
  4. Budgeting

    How to Cost Effectively Spend on Baby Clothes

    Don't let your baby's wardrobe derail your budget. These top tips help you to save money and spend wisely on baby clothes.
  5. Personal Finance

    College Students are Failing Financial Literacy

    Financial trends among college students are a cause for concern, prompting a renewed emphasis on financial literacy.
  6. Budgeting

    6 Cost-Effective Tips for Raising Your First Child

    The excitement of welcoming your first child to your family shouldn't prevent you from making good cost-effective decisions.
  7. Budgeting

    5 Ways to Date on a Budget

    Dating on a budget doesn't have to be boring. Try these 5 tips to find the best dates on a budget.
  8. Budgeting

    7 Kids Items You Should Never Buy Used

    Buying secondhand items is a great way to save money, but these seven kids items should not be bought used.
  9. Savings

    6 Millionaire Traits That You Can Adopt

    Millionaires have more in common than just their bank accounts. They share certain qualities that help them make it to the top.
  10. Investing

    10 New Apps That Help Budget For Expensive Cities

    From platforms for saving money to those that account for side jobs, mobile apps are changing spending habits and income generation in urban areas.
  1. Can mutual funds outperform savings accounts?

    A mutual fund can – and should – outperform a savings account. In most cases, it should not even be a close race. Savings ... Read Full Answer >>
  2. Can I use my IRA savings to start my own savings?

    While there is no legal reason why you cannot withdraw funds from your IRA to start a traditional savings account, it is ... Read Full Answer >>
  3. How soon should I start saving for retirement?

    The best answer to the question, "How soon should I start saving for retirement?", is probably, "yesterday," and the second ... Read Full Answer >>
  4. Can I use my 401(k) as a collateral for a loan?

    Although federal Internal Revenue Service, or IRS, regulations prohibit using a 401(k) account as collateral for a loan, ... Read Full Answer >>
  5. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  6. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  2. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  3. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  4. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  5. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  6. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!