How to Build an Emergency Fund in 2023

Published : 14 July 2023

By : Sachin Gupta

An emergency fund ensures financial security and serves as a safety net for unforeseen costs.  Ideally, it should be separate from other savings and contain three to six months' worth of living expenses. 

What is an Emergency Fund?

Defining the goal is the first step in creating an emergency fund. Think about how much you'll need to set aside for unforeseen costs.

#1 Set a Goal for Your Emergency Fund

Next, figure out how much you can put aside each month for an emergency fund. Choose an amount you can save without sacrificing other crucial objectives by taking into account your current income and expenses.

#2 Determine How Much You Can Put Aside Each Month

Open a high-yield savings account: You ought to set up a high-yield savings account specifically for your emergency fund. In comparison to a conventional savings account, this type will yield higher interest, and the money will be simple to get access in an emergency.

#3 Open High-Yield Savings Account for Your Emergency Fund

Automate your savings to make sure you're consistently increasing your emergency fund. It is possible to program a regular automatic transfer from your checking account to your savings account.

#4 Automate Your Savings

The size of your emergency fund may need to be adjusted as your financial situation changes. Make sure your fund has enough money in it to cover any unforeseen costs.

#5 Make Necessary Adjustments to Your Fund