Many people know that building an emergency fund is an important step for financial security, but finding the cash can be tricky. Much as you might want to have a bundle of money waiting if you had a major medical bill due or endured a job loss, actually accruing an emergency fund may seem almost impossible. Those monthly bills and loan payments keep siphoning off your income.
While it can be challenging, building an emergency fund is likely well within your reach. Among the steps to take: setting a target amount, automating the process, and putting your money in an interest-bearing account. Here’s wise advice on how to start an emergency fund — one that will help you handle unexpected expenses and enjoy some peace of mind.
1. Set a Specific Savings Goal
Most financial pros will recommend that you save three to six months’ worth of living expenses in an emergency fund. Some people, however, will want to aim considerably higher. If you are, say, the sole provider for a family, have significant medical expenses, or are self-employed, you may want to allocate a higher amount. That reflects that you might need some extra coverage.
You can use an emergency fund calculator to help you determine your savings target. Once you calculate that sum, you can divide it by 12 or 24 to get your one- or two-year savings plan for meeting that target.
Worth noting: The goal amount of your emergency fund may seem intimidating, but don’t let that discourage you. Even if you can only make a small payment per paycheck, such as $25, go ahead and do it. Having some money in your bank account for emergencies is better than none.
2. Choose an Account to Keep Your Emergency Funds
The next important step is to get your emergency fund account set up. A few points to note:
• It’s wise to keep your emergency fund in a separate dedicated account. Leaving the funds in your regular savings account can tempt you to spend the money when, say, that new laptop you’ve been eying goes on sale.
• Look for a savings account that will help your money make more money: a high-yield savings account, for instance. These accounts, often offered by online banks, can offer interest rates that are significantly higher than those of standard accounts. Thanks to the power of compounding interest, your money can grow faster.
These tips will help your emergency fund take root.
3. Start Small, and Stockpile When You’re Able
As mentioned above, if even the two-year savings plan is intimidating, don’t worry. The important thing in terms of how to build an emergency fund is to just begin saving and stick with it. If you only have a little bit of money to add per month, save that much. Good start!
Also consider growing your savings by depositing windfall money in your emergency fund. Perhaps you’ll receive a tax refund, a bonus at work, a rebate, or other unexpected source of funds. Put that into your emergency account to give it a boost.
Earn up to 3.80% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $3M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
4. Make Automatic Transfers
It can be a smart move to funnel money into your emergency savings consistently. Letting technology do the work for you can make it quite literally a no-brainer. You could set up automatic savings transfers into your emergency fund just after you get paid; even $10 or $20 per paycheck will build up over time. If you don’t see money sitting in your checking account, you won’t be tempted to spend it.
Or if you have a side hustle, you might decide to always deposit 10% or 20% of your earnings into your emergency fund. Yes, you could keep it all in your checking account, go on a little shopping spree, and feel rich in the moment. Saving it, however, can bring a sense of security while increasing your wealth over time.
5. Manage Expenses and Spending
If you’re feeling you just don’t have any cash available to put toward an emergency fund, consider ways to manage your money better and cut your budget a bit.
Perhaps you could eat out a bit less often, save on streaming services, shop for basics at warehouse clubs, or find other ways to make budget cuts. Once you lower or eliminate some costs, you can put that extra money toward your emergency fund.
Do you know what “lifestyle creep” means? It happens when, as you begin to earn more, you spend more. As your income grows, so do your expenses, meaning you don’t build wealth. If you get a raise at work and then lease a luxury car, you may struggle to increase your savings.
However, if your spending stays in check, you can put a portion of your raises toward your emergency savings account.
6. Don’t Forget to Replenish Your Fund
The last important step for how to build an emergency fund? Remember to replenish your emergency fund after you’ve made a withdrawal. If you needed to pay a big dental bill and tapped your emergency fund, you’ll want to start restocking the money in the account. That can ensure that you are prepared for the next unexpected expense that might pop up. Otherwise, you could wind up drawing down your rainy day savings and have nothing left when needed.
To accomplish this, go back to the step above about setting a goal and start along the path again.
And, it’s worth noting, you only want to tap your emergency savings account for a necessary and urgent expense that truly can’t be paid for in any other affordable way.
Adding to Your Emergency Fund
As noted above, it’s fine to take your time building up your fund, but if you don’t take the first step and start, you’ll never get ahead. If you are struggling (as many people do), to find the cash for this goal, consider these hints:
• Start a side hustle. You could get a weekend gig walking dogs. Or do you love ceramics? Try selling your pieces on Etsy. There is no limit to what you can try, plus a key benefit of a side hustle is making some extra cash, which you can put towards your emergency fund.
• Gamify your savings. You can give yourself fun challenges that help you save cash. For instance, you might challenge yourself not to buy any fancy takeout coffee for a month and put the amount saved in your bank account. The next month, you might skip classes at the yoga studio and instead practice at home. Put the extra cash into your emergency account to see the amount climb.
Recommended: 39 Passive Income Ideas to Help You Make Money
Tips for Staying Motivated When Building Your Emergency Fund
Now that you know how to start an emergency fund, you may want to try these tips for staying motivated:
• Find a buddy. Pair up with a friend or relative who is also trying to save, and support one another through the ups and downs of the process.
• Give yourself a pat on the back. Recognize that saving can be hard and that you may not hit your goal every month. But every time you put money in your emergency fund, you are doing something positive for your financial health. Be proud of yourself, and give yourself a little treat now and then to celebrate your accomplishment.
• Use available tools. Many financial institutions, as well as other companies, offer ways to automate, track, and grow your savings, including financial insights, rounding-up functions and the like. See what is offered that could help you save more easily.
The Takeaway
Starting and keeping an emergency fund can be an important step in achieving financial security. By keeping at least three to six months’ worth of living expenses in an interest-bearing account, you will be rewarded with peace of mind and a cash cushion if you should hit one of life’s unexpected speedbumps. Automating the process, directing any windfalls to the account, and replenishing it after withdrawing funds are all important steps in the process.
If you’re looking for a place to open and grow an emergency fund, see what SoFi offers.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What is the best way to create an emergency fund?
There are a few important steps in creating an emergency fund, including calculating your target amount, opening a high-yield savings account for the money, and adding to it regularly (you might put in any money windfalls, automate your savings, and/or update your budget to free up some cash). It’s also wise to replenish any funds used so the account is always there and ready in case of unexpected expenses.
How do you build an emergency fund when money is tight?
When money is tight, you can still build an emergency fund. Getting on a regular saving schedule can be a wise move. You might automate the transfer of a small amount of money (say, $20) every payday into your dedicated emergency fund. Also, you could use any windfall, such as a tax refund or a rebate, to plump up your account.
Photo credit: iStock/SergeyChayko
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.
Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOBNK-Q324-092