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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


5 Ways to Build Your Emergency Fund

 Apr 15, 2021
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Whether it is car repairs, medical bills, or a sudden job loss, unexpected expenses are sure to pop up from time to time. Putting aside three to six months of living expenses into an Emergency Fund should be at the top of everyone’s financial to-do list.

Having an emergency fund will provide peace of mind knowing you’ll be able to handle these financial challenges without seeking out high-interest payday loans or credit cards – both of which can cause even more financial hardships down the road.

However, putting aside three to six months of living expenses isn’t the easiest thing to do. Here are a few tips to help you boost your emergency fund without dramatically changing your lifestyle or finances.


#1: Payroll Deduction

The best way to jumpstart your emergency savings is with payroll deduction. This service allows you to designate a certain dollar amount to be transferred to a separate savings account every time your paycheck is deposited.

For example, assume you set up a payroll deduction of $100 to transfer into your Savings Account. When your paycheck is deposited into your Checking Account, $100 will automatically be transferred into your Savings Account. This is a great option because it puts your savings on autopilot.


#2: Automatic Transfers

Automatic transfers are very similar to Payroll Deduction; however, the transfer of money is not set up based on your paycheck. Instead, you set up a specific time each month for money to be transferred to your Savings Account (or another account).

For example, you could designate $250 to be transferred from your Checking Account to your Savings Account on the 15th of each month. Similar to Payroll Deduction, this service allows you to put your savings on autopilot.


#3: Bonuses

Many employees receive a bonus once or twice a year. This is an excellent time for you to boost your emergency fund. Even if you are relying on that bonus for other financial obligations, try to put at least a portion of it into your savings. 

For example, if you receive a $1,000 bonus, transfer $500 into your Savings Account and use the remainder for everyday expenses, paying down debt or even fun money.


#4: Raises

If you receive a pay raise, instead of using those funds in your budget, put them towards increasing your emergency fund. Simply increase your payroll deduction or automatic transfers to match the extra money in each paycheck. This will help your emergency savings grow even faster.


#5: Tax Returns

Similar to a bonus, your tax return is extra money you may not expect each year. This year, designate a portion of your return to your emergency fund and then use the rest as you wish. It’s all about creating balance when you receive large lump sum deposits, such as tax returns or bonuses.


Your Top Priority

Too often, people want to move straight into risk-based investments (such as the stock market) to earn more on their savings. After all, if you’re earning more on your investments, you’ll have more for an emergency, right?

Risk-based investments carry risk, meaning you may lose money. Additionally, if a financial emergency did pop up, pulling money from stocks or other investments usually isn’t an instant transaction. You may have to wait days to receive that money and possibly encounter fees depending upon the investment type.

Start with your emergency fund. Once you have three to six months of living expenses put aside, then begin to look at more advanced investment opportunities.


We’re Here to Help!

Saving doesn’t have to be hard. With a little planning and discipline, you can grow your emergency fund quickly and substantially without putting too much strain on your finances.

To learn more about setting up Payroll Deduction or Automatic Transfers, email us at or give us a call at 202-479-2270.

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