How to Build Up Your Emergency Fund

Corey —  September 25, 2009

       If you’ve decided you need an emergency fund, you know where you’ll keep it, and you know how much you’ll need, all you need to do now is start building it up! There are two main ways you can do this: jump start it or one brick at a time.

Jump Start Your Emergency Fund

       The best way to build up your emergency fund quickly is to jump start it. Use a windfall (like an inheritance or tax refund check) to bulk up your emergency fund by $1,000 or $2,000 all at once. You can also try selling your Stuff to make some quick cash to throw in your emergency fund. You could try getting a part-time or temp job and use all the income to build up your savings. (You can do the same thing to help you pay off debt!) These are all serious steps to quickly building up your emergency fund. However, it’s much more likely that you’ll build it up slowly over time.

One Brick at a Time

       Your other choice is to build up your emergency fund just a little at a time. If you opened an Orange Savings account at ING Direct, you can easily do this by creating an automatic savings plan where you automatically deposit the same amount in your emergency fund every month (or as frequently as you choose). Here’s what to do:

       Make room in your budget. Before you set up an automatic savings plan, you need to know how much you can save each month without breaking your budget. So yes, you’ll need to make a budget. Then, if you don’t have anything left over to save each month (or if it’s not enough), you’ll need to find ways to cut back. Look at your unnecessary expenses (wants) and the areas you care the least about first. These are the things that you can do without and still survive. Either cut back on these items or eliminate them completely. Then use the money you’ve freed up to save for your emergency fund.

       Set up your automatic savings plan at ING Direct. This is very easy to do. Once you log in to ING Direct, just click the Automatic Savings Plan (ASP) icon:

ASP Icon

       Then, you’ll see a screen like this:

ASP Form

       All you need to do is enter the amount, pick the account to transfer from and the account to transfer to, pick the frequency (either weekly, bi-weekly, the fifteenth and end of each month, or monthly), and enter a start date. ING will then automatically make the transfer using the information you’ve provided. You don’t have to do anything else.

       When you’ve reached your goal, just go back to that page to turn off the automatic savings plan. It’s as simple as that.

       You can use this plan with just about any high-yield savings account. I just recommend ING Direct for the reasons I outlined in my article about where you should keep your emergency fund.

Take Action!

       Nearly all the personal finance ideas you need to follow are very simple. Understanding personal finance is not the problem – that’s easy. With a clear, concise explanation I’m sure anyone can understand the basics of personal finance. The hard part is taking the action needed to put the information into use. The actions themselves aren’t hard, but maintaining the motivation and discipline required for success can be daunting. Don’t let fear or complacency keep you from action. Choose success, use the information you have, and take the steps to gain control over your finances today.



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

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