Tips for building an emergency savings account

April 12, 2022 Tara Brown

Do you save for a rainy day? If not, you aren’t alone. According to a 2021 Bankrate poll, 51% of Americans have less than three months’ worth of living expenses covered in an emergency savings account. Roughly half of that total includes people that don’t have any emergency savings at all and that number continues to rise.

An emergency savings account is a stash of money that can be used in times of financial distress. The funds are generally kept in an account that is easy to access, such as a separate interest-bearing savings account, and reduces the need to use credit cards, unsecured loans, or retirement funds to cover unforeseen expenses. Although it can be hard to predict how much you’ll need in an emergency, the experts at NerdWallet suggest setting a savings goal equal to three to six months of living expenses.

The stress from not having adequate emergency savings can affect your health, both mentally and physically. According to Mayo Clinic unmanaged stress can lead to high blood pressure, heart disease, obesity, and diabetes. It can also lead to behavior and mental health problems such as depression, anxiety, insomnia, or damaging coping mechanisms such as alcohol or drug use.

To build an emergency savings account, first determine how much to save. The amount you’ll need to save is based on your personal situation. Start with adding up your monthly recurring household expenses, such as mortgage/rent, utility bills, phone/cable/internet, and insurance costs. Then add in other monthly expenses such as transportation costs, credit card payments, groceries, and entertainment. Once you have that total multiply it by three to six months. That is your savings goal.

Once you’ve determined the amount, it’s time to start saving towards your goal amount. Three strategies to get started – automating your savings, reducing your expenses, and saving any windfalls you receive. Examples of ways to cut expenses to build your emergency savings include:

  • Set up an automatic monthly transfer from your personal checking account to your emergency savings account.
  • Take advantage of your employer’s paycheck direct deposit by dividing your paycheck between multiple bank accounts.
  • Use an app that links to your existing spending accounts, rounds up your purchases, and automatically deposits them into your emergency savings account. Some popular apps include Acorns, Chime, and Qapital.
  • Review your entertainment subscriptions, such as Netflix, Hulu, Apple TV, and determine if you can eliminate any of them.
  • Don’t eat out as much. If you eat out everyday for lunch, try bringing your lunch to work instead.
  • Deposit your tax refund. The IRS gives you the option to direct deposit your refund into the account of your choosing. Direct it towards your emergency savings account instead of your personal checking.
  • Deposit any cash gifts you receive, such as birthday or holiday gifts, into your emergency savings account.
  • Sell any unused items around your house and deposit the proceeds into your emergency savings account.

While the goal may seem daunting, with a little planning, discipline and consistency it can be achieved. By following the strategies above, you’ll be able to grow your account, increase your financial security, and keep your stress levels lower. Now get saving!


Tara, the Director of Tax for Vitality Group, is a travel lover, aspiring yogi, and a Halloween fanatic. When she isn’t traveling the world with her husband, you can find her out hiking the Fox River trail, spending time with friends and family, or in her favorite yoga class.

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