5 Ways to Grow an Emergency Savings Account

Jul 10, 2018

Growing an emergency savings account

It's prudent to have a financial buffer available that will sustain you when unexpected expenses occur or other emergencies materialize. If your car breaks down, you receive a large medical bill, or unexpectedly lose your job, having cash on hand is a better way to deal with these issues than using high-interest credit cards or having to take out a loan.

You can start preparing by creating an emergency savings account and putting money aside for financial emergencies. How much you need to save depends on your circumstances, but a general rule of thumb is to aim for three to six months' worth of living expenses as a buffer.

Here are five tips that can help you reach the goal of accumulating this vital cash reserve.

1. Take it Day by Day

Setting aside several months' worth of expenses at once can seem overwhelming. If you approach reaching your goal by taking small steps, it is much more palatable. For example, instead of thinking about setting aside $100 a month, look at it as just $25 per week or even $3 each day.

2. Cut Some Expenses

If you're going to save $3 a day, you'll need to find something to eliminate from your daily spending. It could be as simple as forgoing the daily stop at the coffee shop or taking your lunch to work instead of eating out. Otherwise, look through your budget and see if there is something you're paying for that you're not using. If so, stop wasting that cash and put it towards your savings fund.

3. Simplify Your Savings

One of the easiest ways to consistently save money each month is to make it automatic. Set up a direct transfer, either from your paycheck or your checking account, into your emergency savings account either monthly or every pay period.

4. Erase High-Interest Debt

Saving can be difficult if you have mounds of high-interest debt. If you are in this situation, allocate a majority of your funds to paying down debt with the rest going into your emergency savings account for future expenses.

5. Choose a Separate Account

Just padding your checking account in an effort to "save" can present too much of a temptation. Emergency funds should be in a separate savings account that is also accessible in a time of need.

City Bank - Earn Interest While You Save

An emergency savings account is a financial safeguard that will also provide you with peace of mind knowing that you can meet an unexpected expense. Fortunately, you can also earn interest on those funds with a no-fee or low fee savings account from City Bank.

Stop by your local City Bank branch location, call 1-800-OUR-BANK, or open your account online now.