The Swift Drain: Why Emergency Funds Disappear Faster Than You Think

A midnight trip to urgent care, a speeding fine from a hidden camera, or urgent tree trimming to address a broken branch that’s perilously close to shattering a window—we can all agree that these expensive surprises are much easier when we withdraw savings from an emergency fund.

An emergency fund is there to support your typical budget in extreme financial difficulties. Before the hard times arrive, you build this fund dollar by dollar, month by month, until it can handle anything—from an arborist’s invoice to a medical bill. 

Whatever you’re dealing with, a single emergency can come with a steep price tag. Its enormous cost means a single withdrawal from your fund is likely much larger than your typical monthly contribution. Your savings cash flow becomes unbalanced — money out far outnumbers money in.

Unfortunately, tapping your emergency fund is a lot easier than topping it up. You can quickly drain your savings while restocking them can take years.

Why is Refilling Your Emergency Fund ASAP Important?

When your savings start to dwindle, you become vulnerable to the unknown. Suddenly, an unplanned trip to urgent care isn’t just annoying; it can be unaffordable, too. While you might be able to cover most of the bill, you probably won’t have enough savings on hand to pay it off at once.

Lots of people are in the same boat. They wind up borrowing money online or using credit cards. You can do the same by looking at loans using your phone. If you have data, you can visit a website like Fora Credit in the waiting room. Of course, you can also wait until you’re back home before you apply for loans online from the comfort of your own home.

Online loans can help you in an emergency, but you don’t have to borrow money every time an expense surprises you. You can fast-track your emergency fund to ensure it’s stocked up before your next emergency.

Wondering how? Keep scrolling for ideas.

Go On a Cash Diet

Track all your monthly expenses and separate them into two piles: the essentials and everything else.

Important bills and expenses you can’t miss belong in the essentials pile. Rent, utilities, groceries, and minimum loan payments belong in your essentials. These are payments that you must make in order to run your household safely or avoid costly penalties.

The “everything else” includes your discretionary spending on fun things. Your cash diet eliminates all this spending to free up the maximum amount of money for your emergency fund.

Typically, living on an ultra-strict budget is unrealistic in the long-term, but you can bear it in small doses. Restrict your fun spending until you have a couple thousand set aside in your fund.

Pick up a Side Hustle

The aforementioned tip doesn’t work for everyone. Some people can’t live without their streaming services or takeout. Others already live on a tight budget, and they don’t have any fun spending to eliminate.  

Wherever you fall on this budgeting spectrum, you have another option for building your emergency fund. Rather than subtracting spending, you can add income to your budget.

A side hustle is an easy way to boost your income because you can add it to your full-time job, fitting it in between your typical 9-to-5. You can opt for a traditional part-time job at a shop or try online gigs like filling out surveys or providing transcriptionservices.

Once you pick up your second job, be vigilant about your paycheck. If you’re smart, you’ll funnel your entire side hustle paycheck into your emergency fund to top it up quickly.

Pro Tip: Going on a crash diet and working a side hustle will hasten your savings even more.

Look for a New Job

Depending on your budget, a side hustle is only a Band-Aid solution. It doesn’t get to the heart of the problem — that you don’t earn enough to sustain your lifestyle. If you can’t manage to refill your emergency fund and enjoy splurges on your budget, it might be time to evaluate your career.

Are you making the most money you can? Think about your current position and salary cap; if they don’t provide you with a lot of financial flexibility, you should consider how you can earn more. Put yourself up for that promotion or apply for a higher-paying gig. Depending on the success of your side hustle, you can even leverage this job into a full-time career.

Just be aware of lifestyle creep if you snag that bigger paycheck. You don’t want your fun spending to grow with your income. Instead, budget for your savings first to ensure you focus on your emergency fund before you indulge.

Maximize Interest Earnings

Make your contributions count while you’re on a cash diet. Open a high-yield savings account instead of the typical basic account. A high-yield account uses the power of compounding interest in your favor, so you earn more money on whatever you manage to save.

While shopping for high-yield accounts, watch out for restrictions. Your emergency fund must remain liquid, so it’s available at a moment’s notice. You don’t want to trade your liquidity for a higher interest rate. The money you earn isn’t worth it if you can’t access your cash away during an emergency.

The Bottom Line:

Spending money will almost always be easier than saving it. That said, you can effectively rebuild your emergency fund on a tight timeline. You can accelerate your emergency savings by following the tips you learned here today.

Try your best, but don’t agonize over being slow. Most people take up to two years to save just one month’s worth of living expenses in their emergency funds. So, give yourself a bit of grace. Work hard to save quickly but acknowledge how hard saving can be.

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