The 5 best ways to build an emergency fund

The 5 best ways to build an emergency fundThe 5 best ways to build an emergency fundMaking ends meet while also trying to scrimp together savings for college, a house or retirement let alone a luxury such as a vacation or big-screen TV can be daunting. But there is one savings goal you should not ignore an emergency fund.This cash set aside for unexpected emergencies such as a job loss, major auto repair or medical crisis, is crucial tofinancial security.Follow Ladders on FlipboardFollow Ladders magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and moreRainy days come for everyone, whether its a broken tail light, a leaky roof or needing to take a week off work to fight the flu, says Allie Vered, director of theAmerica Savescampaign at Consumer Federation of America. Maintaining an emergency savings account may be the most important difference between those who manage to stay afloat and those who sink in debt.According to the Federal ReservesR eport on the Economic Well-Being of U.S. Households in 2016, 44 percent of adults say they couldnt cover an emergency expense costing $400 without borrowing money or selling something.As little as $500 could help you through a financial squeeze, but ideally an emergency fund should cover several months to a years worth of living expenses. While that may seem challenging, dont be intimidated into inaction. Set a goal and come up with a plan. Start small, but start. Just $10 a week adds up to more than $500 in a year.Your emergency fund should be stored in an easily accessible place, but not so easy that you regularly dip into it for everyday expenses. Keep it separate from your checking account by creating a dedicated brick-and-mortar or online savings account.Here are some ideas to help you start building that emergency fundReduce your bills and expensesThe most obvious path to amass extra cash is tocut your bills and expenses. For example, you could reduce your commuting expenses ( gas, car maintenance, tolls, parking) by carpooling, using public transit or riding a bike. Or save those bucks you squander daily on take-out by cooking more meals at home, brown-bagging it for lunch, or giving up those things you know are bad for you anyway soda, snacks, and smokes.Try shopping around for better rates on auto and homeowners insurance, phone plans, cable and credit cards. Use a list and coupons when grocery shopping to eliminate impulse buys.Consider ending some of those invisible automatically billed subscriptions and memberships you may not even remember you have magazines, smartphone apps and cable TV subscriptions. Try reducing the number of professional services you pay for, like weekly house-cleaning, car detailing or mani-pedis.Pick up a side hustleAnother avenue to extra cash is finding a way to earn a supplemental income. If you can swing it and have the time, consider a second job, at least temporarily. Rent out a room to a short-term tenant, pet sit or walk dogs on weekends, check out gig jobs online or participate in focus groups for cash.Sell your stuffPut that one mans trash is another mans treasure adage to work for you. Clear out your kids old toys and bikes, your unread books, dusty exercise equipment and unused power tools. Have a yard sale or sell those items online.Stash away extra incomeSave any windfalls that come your way, whether it be an inheritance, tax refund, raise, bonus, commission or birthday check from grandma. That can give your emergency fund a substantial boost.Remember your changeYou may be surprised at how fast collecting loose change can add up. Regularly root through your couch, car seats, pockets, purse and bottom of the washing machine for coins. Set up a jar in your house for daily deposits. Or when you get change from breaking a $5, $10 or $20 bill, instead of spending it, throw it in the jar. When it fills to the brim, shuttle it off into your savings account and start over.Many banks will also le t you round up purchases made on your debit card to the nearest dollar and automatically transfer the extra change to your savings account - Bank of America calls it the Keep the Change Savings Program. There are also many smartphone apps, likeQapital, that help you create similar saving schemes.If you respond well to a challenge, consider trying the52-week money challenge. Pick a start date. In week one, save $1. In week two, save $2. And so on through 52 weeks, at the end of which youll have saved $1,378.A final tip Dont be tempted to use your newfound savings for a payment you knew was coming, such as acar insurance premiumor a splurge for an island trip. An emergency fund should not be touched until you absolutely need it. Then it will be a lifesaver.It gives you peace of mind knowing that you can afford to pay those inevitable unexpected expenses, Vered says.Michele DiGirolamo is a former longtime reporter for United Press International and a freelance writer for MoneyGeek.com .This article first appeared on Money Geek.You might also enjoyNew neuroscience reveals 4 rituals that will make you happyStrangers know your social class in the first seven words you say, study finds10 lessons from Benjamin Franklins daily schedule that will double your productivityThe worst mistakes you can make in an interview, according to 12 CEOs10 habits of mentally strong people