Debt Management

7 simple ways to create an emergency savings fund


You may feel stranded without a credit card, but the sooner you come up with an emergency cash fund, the less reliant you’ll be on plastic

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question for the expert

Dear Credit Guy,
After separating from my ex-spouse, I was left with all the credit card debt, most of which was from running a joint business. But the credit cards were in my name. I settled the debt and paid back 40 percent of it approximately 18 months ago.

I now work full time with a net income of $830 per week. However, sometimes I get stuck and need a credit card to get my car serviced on time, to go to the dentist, etc.

Is there a credit card that I would be able to apply for without being rejected? I would be happy to only have a $2,000 to $3,000 limit. I know I can get a debit card, but this does not help for unexpected emergencies. Your advice would be greatly appreciated. — Kim

Answer for the expert

Dear Kim,
You are correct that you need to have extra funds for those unexpected and sometimes emergency expenses that we all face from time to time. If you just don’t feel comfortable without a credit card, I recommend you comparison shop for the best credit card deal. Keep in mind that if you use the card for unexpected expenses, you should have a plan in place to pay the balance down as quickly as possible.

What I’d like you to consider is a much less expensive way to cover those expenses – an emergency savings fund. I recommend that you start saving today. I know that financial experts tell people in situations like yours all the time to save money for emergencies.

Today, I’m going to walk you through the process so you and other readers will know exactly how to accomplish saving three to six months of living expenses. Here we go:

Seven steps to create an emergency fund

  1. Don’t put off getting started. Even if you pack a peanut butter and jelly sandwich once a week and save the $10 you would have spent on lunch that day, you will be saving $40 a month or $480 a year. (That should cover a trip to the dentist.)
  2. Trim nonessentials from your budget. Stop paying for premium cable, daily mocha lattes and brand name food and clothing and you could save as much as $1,600 in one year.
  3. Consider getting a part-time job. Even if it is three to four hours a week at night or on the weekend, the extra income could go a long way to creating that cushion you need.
  4. Give the $5 bill saving plan a try. For those folks who use cash regularly, this plan involves keeping any $5 bills that you receive throughout the day and week and placing them into savings rather than spending them. A conservative estimate of savings using this plan would be $20 a week or more than $1,000 a year.
  5. Save half of all “extra” money. When you receive a raise in pay, place half of your new earnings into savings. Have the money deducted automatically from your payroll and placed into your savings account, and you will never miss it. Likewise, save half of any tax refunds or an inheritance.
  6. Continue to make your car or other loan payment after you have paid off the balance due. Put the money into savings each month just as if you are continuing to pay the note. It takes discipline to accomplish this, but I assure you, if you don’t put the money in savings, it will get spent. To convince yourself to stick to your savings plan, think how nice it will be when the car needs service and you have the funds to pay for it with no additional interest charges tacked on to the total.
  7. Include saving for something fun once you reach your goal. After you reach your emergency savings goal of three to six months of living expenses, you will have developed the habit of saving. Continue to save, only this time for something fun. The dream vacation to Disneyland you never could afford, a European vacation … you get the idea.

So while having a credit card in hand is handy, having an emergency fund to cover unexpected expenses is even better.

Take care of your credit!

See related:How and when to use ’emergency’ credit cards, Emergency fund money critical in a crisis


Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Debt Management

Is reaffirming card debt during bankruptcy wise?

When filing for bankruptcy, a reader want to reaffirm credit card debt, with the hope of still being able to use the card. Chances are slim the card will still be usable.

See more stories
Credit Card Rate Report Updated: July 2nd, 2020
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.