7 Ways to Increase Your Emergency Fund

One of our family goals for 2015 is to increase our emergency savings fund. Financial experts make different recommendations on emergency savings, but generally the recommendation is to have 3-6 months of savings lined up in case of an emergency or job loss. An emergency fund is just what it sounds like: money saved up for those unexpected costs that would otherwise blow your budget (i.e. trips to the emergency room or major car failure) (Thanks, Dave Ramsey!)

At the writing of this post, the Kedersha family has approximately two weeks of savings lined up in case of emergency. I do not anticipate a job loss anytime soon, but our 50+ year-old home is ripe for a myriad of home emergencies. We would like to be in a place where we can cover our expenses if there is a home emergency.

Here are seven ways to increase your emergency savings fund in 2015.

1. Cut back your spending in discretionary categories.

A few places where most individuals and couples can make some quick cuts is in dining out, coffee shops and grocery bills. A few dollars here and there every day or every week will quickly add up. A few weeks ago, our family ate Sunday dinner at a local barbecue restaurant we love. The problem is that we spent almost $50 for dinner. We could have very easily eaten at a different barbecue restaurant in town for literally half the price. If you do that once/month, at the end of the year you will have saved $300. Even better… go grocery shopping and cook at home!

2. Sell some stuff!

So much more can be written here, but many of us have much more than we need. More clothes, furniture, books and so much more. The annual garage sale helps declutter your home as well as provide some money towards your emergency fund.

3. Find a way to increase your income.

I am not a huge fan of this one, as typically most people have an expense problem, not an income problem. In other words, we often have no trouble making money; the larger problem is that we spend too much money. That being said, are there any ways you can increase your monthly income by a few hundred dollars, even if just for a few months? For instance, my wife is a physical therapist. She is a stay-at-home mom, but is able to work a few physical therapy shifts each month. Some extra shifts can increase your savings quickly.

4. Cut down your monthly bills.

A few months back our community group couples compared our electric bills and rates. We discovered we were paying about twice as much as a few other couples in the group. A few phone calls later, we switched companies and dropped our electric bill by almost 50%. Do the math… over a year, we literally saved almost $1000. Do the same with your cable, internet, mobile phone and other bills. In fact, you can really save some money by just killing your cable entirely. Now that college football season is over, it might be time for us to move in that direction!

5. Evaluate your big ticket items.

The quickest and most effective way to increase your savings is in the big-ticket items: housing and transportation. You can find hundreds of dollars by either refinancing, selling your car and buying a more cost-effective car, looking into public transportation, or even downsizing your home.

6. Cut back on your vices.

Whether its tobacco, Diet Coke, alcohol, beer or some kind of regular food treat, can you get rid of this habit or addiction and start saving a bit more? For me, books are my vice. I love to buy and read books. I could save some money if I significantly cut down on my reading addiction!

7. Track it and make it visual.

We have a dry erase board in our home and we are using the dry erase in 2015 to visibly track our progress. No, we do not have a giant thermometer to measure progress, but we do have a way to visually monitor progress towards our goal. In addition, I have a few itemized accounts in our Capital One Savings account (future car payments, taxes, and emergency savings). I can visually track online exactly how much money we have in our emergency savings account.

I know this is really just a first world problem. The fact that we make an income makes us wealthier than most of the world. That being said, there is wisdom in saving for a rainy day, as long as you are not saving/hoarding for a rainy lifetime.

Your turn:

Do you have any money in your savings account in case of an emergency?

Have you and your spouse developed a plan to increase your savings in case of an emergency?

Which of the seven ways can you take to help establish/grow your emergency savings fund?