One of the least glamorous parts of being smart with your finances is to build your emergency fund. We’ve talked before about the importance of having an emergency fund  so I am not going to go over that again. But getting your emergency fund up to the amount you need it to be does take time. Below are five ways to help you build your emergency fund quickly.
Calculate the Amount Needed For Your Emergency Fund
Before I get into the ways to build up your emergency fund, we need to first make sure you know how much your emergency fund should be. In general, it should be 6-9 months worth of your living expenses. Add up how much you spend in a given month and multiply that by 9 to get the top end of your emergency fund.
For example, let’s say my monthly expenses are $4,000. If I multiply that by 9, I get $36,000. That is how much I should have in my emergency fund. It is a lot of money and that is why I am providing the tips below to help you to build your emergency fund up. Let’s get started.
5 Ways to Build Your Emergency Fund
- Tax Refund.
Most of us get a tax refund. Many times it is in the thousands of dollars. If you take this money and just put it into your emergency fund, it will give your savings a boost. Now, before you get upset that you can’t do anything fun with this money, I have a solution for you. Take 5% of your refund and do whatever you want with it and put the rest in your emergency fund. Doing this should satisfy your need to spend some of it. For more see 9 Ways to Spend Your Tax Refund Wisely .
If you get a bonus at work, use it to build your emergency fund. You shouldn’t be counting on your bonus to cover your living expenses, your salary should be doing that. The bonus you get is purely an extra paycheck you get that you have no plans for. So put it in your savings. (And if you have to, take 5% of this as well to blow on whatever you want.)
If you receive a healthy sized bonus and tax refund, you could easily boost your emergency fund by a couple of months with just these two options!
Cash Back From Credit Cards.
This can get dicey as you have to make sure you don’t just spend for the heck of it. But using a cash back credit card  is a great way to build your emergency fund. My wife and I do a variation on this. We have our emergency fund built, so we use our credit card cash back to invest. It’s the same idea. Here is how we do it.
We put certain charges on our cash back credit card and when the bill comes, we review how much cash back we have available. Every few months, we apply our cash back reward to our outstanding balance. We then pay the credit card bill and at the same time, make a transfer for the reward amount to our investment account.
For example, let’s say we have a credit card bill for $2,000 and we have $250 in cash back rewards. We apply the $250 in rewards to the bill, making it $1,750 that we owe. We pay the $1,750 to the credit card company. We then take $250 from our checking account and transfer it to our investment account.
For you, the process is the same, only you will transfer the $250 to your emergency fund.
- Pay Off Debt.
This one has nothing to do with income. But since you have to base your emergency fund off of your monthly expenses, paying off debt is a boost. If we go back to our earlier example of $4,000 monthly spending, let’s say $250 of that is from credit card payments and $400 is from a car payment. That is $650. If you pay off that debt, your monthly spending drops to only $3,350. Multiply that by 9 months and you now need just over $30,000 in your emergency fund.
By paying off the debt, you lower your monthly expenses which lowers the amount you need in your emergency fund.
- Cut Other Expenses.
The same idea about paying off your debt applies here. Look at some easy ways you can trim your monthly expenses. Maybe you can get a cheaper cell phone plan. Maybe you can cut some cable channels out . Eat in more? Grocery shop smarter? Shop around for insurance?
The options are almost unlimited. You just have to sit down and take some time to run through your expenses and see which ones you can cut and how much you can save. Remember, you don’t have to completely eliminate some spending you just have to see if you can reduce some areas where you do spend now. But eliminating some expenses doesn’t hurt either.
Once you do this, you can recalculate your monthly spending, multiply this updated number by 9 and see how much less you have to save to fully fund your emergency fund.
At the end of the day, there are little things you can do to build your emergency fund. If you take a few minutes and think about it, you will certainly be able to figure out some options that will work for you.
I realize that the last two points aren’t adding to your emergency fund total, but by lowering the amount you do need, you are in essence increasing the amount you have already saved.
Remember, it isn’t exciting to have a fully funded emergency fund. You look at that money and think about the new TV or killer vacation you can take. But when an unexpected expense comes up – like a broken water heater, dead AC unit or a job loss – you will be very thankful you have that money sitting there to help cover the bills.