How to Build an Emergency Fund in Less Than 30 Days

When it comes to building an emergency fund, everybody learns this hard lesson of missing the emergency fund when he/she gets into trouble paying for unexpected last minute bill

This personally happened to me in 2018 when I had to fix my car urgently

First, I consider myself clever when it comes to buying all of my used cars

Although I choose a perfect Japanese cars but the inevitable happened

I had to change completely my entire rusted muffler

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emergency money to repair your car

In fact, I couldn't defer it and since I went to my trusted mechanic, I had to change few other things that were about to be defected soon

I paid around $700 cash as my mechanic accepts cash and checks only

I learned from this lesson and I started building an emergency fund immediately

It is a gut-wrenching situation, I don't want you to get into this situation

So let me talk about how to build an emergency fund in less than 30 days

What is emergency fund

In very simple words, an emergency fund is a personal money you set aside for a very last minute payment which you didn't handle when you created your monthly budget

Examples of unexpected expenses can be an urgent car repair, medical or dental bill not covered by your medical insurance, urgent renovation to your home, God forbids if you get laid off

Finally saving for emergency fund for something completely would never cross your mind like COVID-19

What is an emergency fund money used for

Don't give yourself an excuse to use your emergency fund to pay for holiday parties or gifts

You know Thanksgiving and Christmas come to you same time every year

They are not an emergency anymore so you plan ahead for holiday seasons

Emergency fund covers the unexpected events where you have no control of predicting them at all

A question here to you, if after a very strong wind you start seeing few shingles from your roof blew away

building emergency fund to repair your home

Next year when most of your shingles start falling off, do you consider replacing your roof from your emergency fund

I believe you should not as you were already aware of the incident long time ago

Ask yourself the following 3 questions before you use your emergency fund

  1. Is it unexpected?
  2. Is it urgent?
  3. Is it necessary?

If you answer Yes to all the above then you can use the emergency fund money

Do I really need an emergency fund

Let me ask you this question below and be honest to yourself

Do you think you can complete a full year without facing any unexpected expenses?

I would say it is almost impossible to complete 6 months without having last minute bills and unexpected expenses

You have to embrace the inevitable nature of life

How much money should you save in your emergency fund

According to some financial planners, you need to save from 3 to 6 months of all your household expenses including the mortgage/rent payment

If you have a realistic budget, you would easily know all of your running expenses for recent months

Don't get discouraged, start today by saving as little as $100 as a start up step

According to Dave Ramsey 7 baby steps for building emergency fund

Step 1 is to save a minimum of $1,000 to protect you from borrowing money while you tackle step 2 for paying all of your debts

Is $1,000 enough for emergency fund

According to Dave Ramsey's book the Total Money Makeover

This is step 1 which I described above

Dave Ramsey calls it the baby emergency fund plan saving $1,000 as a first step

For those who have credit cards debts or other loans to pay saving $1,000 for the emergency fund is more than enough to handle any unexpected emergencies like a repair for your car or urgent medical bill

What Is a Fully Funded Emergency Fund

I discussed above step 1 – saving the first $1,000 then step 2 – paying all of your debts

To establish what is called a fully funded emergency fund, both income household should save 3 to 6 months for their household expenses

I say 3 to 6 months of expenses, I didn't say income

Income is what you bring from your job while expenses are what you pay as essential expenses to keep your house running

Is savings the same as emergency fund

Are you confused between savings for retirement or investment and saving for an emergency fund

If you have no previous savings, start saving the money for the emergency fund first

Keep in mind that you are saving for an emergency fund to cover sudden incidents

On the other hand, you don't save for your retirement with a plan to break it for unexpected expenses

You should save for retirement in long term investment saving plan

How to start an emergency fund with no money

Now assume you are excited to start your emergency fund

Perhaps because I convinced you with the idea of building a contingency plan to face the unexpected incidents in life

Or you started freaking out in time of recession and you hear stories from friends or family members about recent layoffs

Whatever the reason behind your decision to start your emergency fund

1) Start by opening a saving account with high interest rate and deposit $1 into it

Make a promise not to touch it in unnecessary expenses

You know the rules and I assume you are adult enough

Dave Ramsey ‘s Total Money Makeover suggested to open a saving account in different bank other than the one you do your daily banking with

He went so far with stories of people who managed to hide the money in a frame with a sealed glass where you have to crash it to get the money

2) Begin with the baby emergency fund plan

What I mean by baby is to deposit $500 as soon as possible

I would say to complete depositing your first $500 in your first week of starting your emergency fund

3) Automate saving into your emergency fund

This step works perfect for people who build an emergency fund within their same bank along with their checking account

You setup an automatic transfer for small amount weekly or biweekly

Something that really builds up over time

4) Start multiple source of funding your emergency fund

Everyone of us can really liquidate $500 worth of household products or unused electronics into cash

  • You can arrange a garage sales and take all of its profit to your emergency fund
  • Cut your expenses especially for discretionary items like the morning Coffee

I know you can mimic the purchase of you Coffee to every other day

To be fair, I am a Coffee addict so I know how we all spend on discretionary things

Since I noticed a surge in spending money on morning Coffee so I limited it to twice a week maximum

Follow the 101 money saving ways and check what you can save instantly and take its money to the emergency fund saving account

How long does it take to save for an emergency money

There is no specific timeline for you to take to complete saving for an emergency fund

To expedite the process of saving for an emergency fund, consider the following to help you focus on dedicating money to your emergency fund saving account

  1. Imagine you will be laid off in 3 months and act accordingly
  2. What about discovering a critical illness not covered by your medical insurance
  3. Imagine a severe dental pain then you discover that your dental plan does not cover that

I am not a jinx, on the other hand I am always positive but we as human beings don't act to something unless we believe that it is going to happen

Think about COVID-19, it would have been quarantined if we had taken good measures when we noticed the first symptoms back in December, 2019 in Wuhan, China

Where does Dave Ramsey recommend to save your emergency money

For those of you who don't know who is Dave Ramsey

Well, Dave Ramsey is an American personal money management expert and a popular radio show speaker with a multi million dollar company he owns and operates

He measures his success by the number of lives he very last minute managed to change and saved them out of debts

Dave Ramsey suggested where to keep an emergency fund

You should in invest your money in a money market account also called money market deposit account

The latter means any account that pays you the highest interest when you deposit your money

You should not invest your money in any risk account that can go down in value even if it promises high profits or any account that charges you penalty when you take the money out early like CD which stands for Certificate of Deposit in US or GIC which stands for Guaranteed Investment Certificate in Canada

What does Dave Ramsey say about emergency money

Dave Ramsey considers building emergency fund process as one of the essential part in the 7 baby steps towards financial freedom

You need that safety net between you and life

dave ramsey describing the emergency fund

You need an emergency fund, an old-fashioned Grandma's rainy day fund

well I should be positive but I am positive, sure it is going to rain one day

It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity

dave ramsey's quote to encourage PEOPLE to save money

Pray like it all depends on God, but work like it all depends on you.

for those who believe why we need emergency fund if we reply on god

Final notes on saving for emergencies

Finally I hope you realized the importance of saving money in case of emergencies

Check if you know how to build your family budget, this would definitely help you to plan for an item reserved for an emergency fund

I cannot push you to save money unless you have a vision and plan for your future

All I can do is to provide you with an emergency fund tracker free printable

Saving for an emergency fund free printable

Click to download for free from my products page


Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.