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5 Steps to Rebuilding Your Emergency Fund

Meeting your emergency fund goal is a huge accomplishment. So, when it comes time to spend the money for an urgent or unexpected purpose like paying a big tax bill, draining the fund you worked so hard to build can be extremely disheartening. Having to fork over funds you've spent several months saving is a letdown and it's easy to lose momentum. The best way to stay on track is to revise the road to rebuilding your emergency fund; here are simple guidelines for doing just that.

  1. Set a two-part goal: how much money you want to save, and a deadline to squirrel away that amount.
  2. Play around with my savings calculator to help you determine the specifics.
  3. If you'll need to save more money per month than you have been, consider tracking your spending for a month for a clearer picture on where you can cut back.
  4. Adjust the amount you have automatically transferred from your checking to savings account each month to reflect your new savings goal.
  5. Redefine what is an emergency, and only use your fund for those predetermined purposes.


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aimeeb aimeeb 7 years
I'm always in "save" mode.
Spectra Spectra 7 years
expresso-not everyone pays in during the year for taxes. My brother-in-law and sister always end up owing because he's an independent contractor, so he doesn't have any tax withheld all year. The first year that they had to pay in, they did have to drain their savings and file an extension so they could pay it all, but now what they do is to set up a sort of escrow account for it. They set aside what would have been taken out in taxes every week into a special account and then use it to pay in.
expresso14 expresso14 7 years
Draining your emergency fund to pay taxes means you need to take another look at your withholding - the IRS website has a handy calculator to doublecheck. I have an emergency fund (for true out of the blue emergencies) and a rainy day fund for the things that will happen (like car stuff) but I don't know when. Extra money gets split between the funds, plus a small share goes into my 'fun' fund.
hithatsmybike hithatsmybike 7 years
too bad interest rates are so low on savings right now! it's a real downer =(
supercoolnat supercoolnat 7 years
Just one note, if you're draining your entire emergency fund to pay taxes you owe, then you've got bigger issues to deal with.
TidalWave TidalWave 7 years
I use ING so I cannot easily get to my savings
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