savings

5 ways to grow an emergency fund

Determine how much you need
Determine how much you need

Start building your emergency fund with a specific goal in mind. While your savings goal will depend on your income and expenses, a general rule of thumb is to save enough to cover four to seven months' worth of expenses.

"Everyone has wants, needs and desires when it comes to spending money," says Pete D'Arruda, financial radio show host, author and president of Capital Financial Advisory Group in Cary, N.C. "Make sure you have seven months' worth of emergency income available for the needs."

Kevin Gallegos, vice president of Phoenix operations for Freedom Debt Relief, says to focus on having enough to cover expenses when setting your savings goal, not on replacing your entire income.

"Remember, in an emergency, we don't fund vacations, fancy new clothes, dining out or other luxuries," he says.

While you may aim higher eventually, Smith recommends making small goals at first, such as saving $1,000 and working your way up to a reserve to cover several months' worth of expenses.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Ask Dr. Don

Quickest path toward $1 million?

Dear Dr. Don, This question involves how best to make for a better life for my family. How can I make a one-time investment of $5,000 grow into $1 million or more over 60 years? One of my broader goals is to encourage my... Read more

advertisement
Partner Center
advertisement

Connect with us