How Do I Start Building an Emergency Savings Fund?

by US Mortgages / January 28, 2019

Let’s face it... life happens. You could feel completely secure in your career, comfortably living out the American Dream with your beautiful family, fancy SUV, and home in the suburbs. {Insert your own American Dream here}. Life is good...

And then you wake up one cold winter morning and your pipes have burst with 2 inches of water in your basement. Maybe you drive into work the next day and your seemingly secure job has been eliminated. Or, perhaps even worse, you get a phone call from your doctor with some not-so-good and very expensive news about your health. 

The question now becomes, how are you going to afford life’s little curve balls? The answer? Through an emergency savings fund.

What is an Emergency Savings Fund?

Simply put, an emergency savings fund is money you’ve set aside for the unexpected. It’s the safety net between you and life. This money should be used for true emergencies like loss of wages, medical expenses, or flooded basements. It’s not for a vacation to Mexico or the newest TV.

How Much Should You Save?

The answer depends on your personal circumstances. If you're a two-income household, you might be able to get by with three months of savings. If you are a single-income household, self-employed, or have regular medical expenses, then you may need to have at least six months' worth. The amount needed will also increase as you get older and take on more responsibilities, like kids.

How Do You Start an Emergency Fund?

1. Make a budget and set a monthly savings goal. The first step to starting an emergency fund is to list out and understand your monthly income and expenses. This will also help you know how much you have available to put towards your savings goal. has some really great free resources to help you get started. Fair warning: If you have a habit of frequently buying expensive lattes or new shoes, this exercise may convict you to start cutting any unnecessary expenses.

Once you’ve established these two things, now comes the time for self-discipline. It might be hard to put those dollars away at first, but it will get easier and start to add up quickly before you know it. As time goes by, you may receive a promotion or even reduce your other debts. If this happens, try increasing your monthly savings amount to help you achieve your goal that much sooner.

2. Keep your change. As simple as this sounds, there’s a lot of savings to be had just by putting your $1 and $5 dollar bills into a jar after breaking larger bills. Once the jar is filled, put it into your savings account. There are even some helpful mobile savings apps that will automatically transfer money to your account based on the rules you set up. Check out this great article from Entrepreneur Magazine for a comprehensive review on some of the best-rated services.

Saving with Mortgage Lending Companies

3. Earn supplemental income. This one can be tough because it requires your time and willpower, but there are a hundred and one ways to earn supplemental income and it doesn’t have to mean taking on a second job. If you have something of worth laying around your home, try selling it. If you can, try renting out your home on Airbnb or VRBO for a week when you go out of town. You’ll be surprised how much you can earn when you think outside of the 9-to-5 income box.

4. Save your tax refunds. As tempting as it may be to blow this money on something frivolous, putting it into your savings can be a quick way to reach your overall goal. If you don’t like the idea of the government holding onto your refund interest-free, you can also adjust your W-4 to have less money withheld. Those dollars will now go straight to you and hopefully in-turn to your emergency savings account.

5. Use your home’s equity. This may surprise you, but the equity in your home belongs to you right now, not just when you sell and it can be one way to reach your emergency savings goal in record time. In 2017 alone, homeowners gained an average of $15,000 in home equity, or $908 billion in total. You can take out your home’s equity through a HELOC or a Home Equity Loan. Your equity amount will vary depending on how long you’ve owned your home and personal credit profile.  

Remember that the best time to access your equity is when you are employed and don't really need it. Having control of that equity can add supplemental options besides simply having to sell your home to bridge the gap when bad luck strikes, like experiencing a layoff.


Now that you understand the importance of an emergency fund and how to start saving, make a point of doing it. Then when the basement floods or you're surprised by your company’s recent layoffs, you won’t feel panic. Just pure peace in the fact that you were self-disciplined enough to save for life’s curve balls.

At US Mortgages, we're not only a mortgage lending company. We’re in the business of helping customers with all their home financing needs, including home equity loans. If you’d like to start your emergency savings by accessing your home’s equity, talk to US first.

Want to know how much you should save?

Try Our Emergency Cash Reserves Calculator

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