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How We Are Funding Our Emergency Fund on a Really Tight Budget

Funding an Emergency Fund

Guest post from Crystal of Serving Joyfully

A couple of summers ago, our hot water heater went out. I made a quick online transfer so we could pay $400 cash for the new water heater and delivery — and we had the new one that same day.

It was nice to have that money set aside in our emergency fund… but it wouldn’t always have been that easy. We are a single-income family with a very tight budget. At one time in our marriage, an unexpected expense of $400+ would have been a disaster. 

We weren’t horribly irresponsible, but we did use a line of credit as our “emergency plan.” So, how did we finally give ourselves that emergency cushion?

We Made It A Priority!

At some point, the light bulb finally went on for us and we saw that we should save up something instead of relying on a line of credit. Admittedly, this wasn’t easy. Like I said, we live paycheck-to-paycheck on a very tight budget.

But, since we made it a priority, we could save a bit here and a bit there until it eventually seemed to add up.

There are hundreds of ways to save money here, or earn money there. But if you aren’t committed to it, you won’t make them work.

 “If you want to do something, you’ll find a way. If you don’t, you’ll find an excuse.”

There are plenty of excuses for not saving up that money — you won’t even have to look for them. But, if you’re committed, there are also plenty of ways to reach the goal. 

When tax time comes, our refund goes to pay down debt or beef up our emergency fund instead of spending it on something like a big screen TV or a family vacation. Is this fun? Not so much. But, because of these boring choices, when expenses come up, we’re now in a better position to handle them instead of worrying about them.

That peace of mind is worth way more than a big screen TV.

If you’re struggling to set up your emergency fund, here are two tips that helped us.

1. Define “Emergency”

Don’t waste your hard work on “emergencies” like forgetting to thaw out meat for dinner or overspending. If your emergency fund becomes that kind of cushion, it will be far too easy to keep taking out without replenishing. (Ask me how I know!).

Your emergency might look different than mine, and that’s okay as long as you are consistent. We don’t have a lot of wiggle room in our budget, so our emergency fund only covers unexpected expenses that are non-negotiable.

2. Expect Setbacks

When you’re first starting out, be prepared for some discouragement. For a long time, it felt like every time we got started on our emergency fund, we would have some sort of setback.

If we saved up $75, we’d have a $100 problem with the air conditioner. If we got up to $500, we’d have a $400 car repair.

It can be discouraging, but just remember, those problems would happen with or without your emergency fund to cover them.

Since we are Christians, I have learned to look at those things as just another way that God provides our daily bread. He doesn’t promise that we’ll know where the provision is coming from forever, but He makes a way right now, and for us that sometimes looks like saving up just enough money to cover the next disaster.

What creative ideas or tips do you have for funding your emergency fund on a tight budget?

Crystal Brothers blogs at Serving Joyfully where she shares about her debt-free journey, frugal living, marriage, and the adventures of homeschooling her two rambunctious boys. She is the author of Intentional Marriage: A 31-Day Devotional to love your husband well.

photo source

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  • Rose says:

    using swag bucks, send earnings, pinecone research ,my points, inbox dollars, and my survey, and one other survey site that the name escapes me at the moment!! Using all of these by putting the payments into PayPal, then transferring to a bank account : ) This is just a start for us, but almost $200 so far. plus we will use that extra pay check in august!!!

  • megan says:

    Something breaking in a household or a car is something I don’t consider an emergency. That is simply a budget category. I think emergency funds are for loss of employment, illness, divorce, etc. If I considered every little break an emergency, I’d have 10 a year. But I’m glad you are able to deal with these events. Great!

    • Megan, I am so glad that you are able to have budget categories for these items. Some people (like us) are on such a tight budget that they are barely making ends meet and literally do not have extra for those other budget categories. I want to give them some hope and encouragement 🙂

    • Of course every family is different and it’s up to each family what constitutes an emergency, but this type of thing; large appliances breaking, big car repairs, these are exactly what I would call an emergency. Yes, we set aside some for car maintenance but sometimes a car needs a repair which is much more than what we have set aside. It doesn’t really matter what we call it, whether an emergency fund or a budget item. Either way, it’s setting aside funds so we can pay cash. I think the point here is that it takes discipline to go ahead and reserve those funds for things you don’t necessarily expect, so that you won’t have to depend on a credit card.

    • I agree with Beth. There is regular maintenance for a car like oil changes and new tires which we budget for. Then there are unexpected expenses like a car’s alternator or a hot water heater that we can’t really plan for so we save in an emergency fund to cover. Saving isn’t fun and exciting but it certainly makes life easier when the unexpected happens!

    • WilliamB says:

      Now that I can, I have two such funds, plus replacement funds. But what really matters is having the savings for these events, rather than what you call the savings accounts.

      1) True Emergency
      This is for events that are not predictable at all. Getting fired. Someone burgling your house. Cancer. A flood when you don’t live on a flood plain.

      2) Life Happens.
      This is for expenses that you know will happen, but you don’t know when it will be or how much it will cost. If you own a major good (such as fridge, car, or bicycle), you know it’ll break down at some point. But the timing is unpredictable and the cost uncertain.

      3) Replacement Funds
      Savings to replace major goods, because nothing lasts forever. I started saving for a new roof as soon as I bought a house. Right now I’m saving for a new fridge (see below).

      Car maintenance is a Life Happens event; car replacement because someone totalled your car is a True Emergency.

      Here’s an example: last month my 10 year old fridge stopped working, more or less. A home fridge typically lasts 10-15 years – was mine dead or just wounded? How could I find out, preferably without spending $150 for a weekend housecall? This is what a Life Happens fund is for. Anwer: I determined it was just wounded because the freezer still worked. I went online to determine what the problem might have been. I waited till Monday for a housecall, reducing the cost by using what I found online to tell her what the problem might be. Total cost $75 plus some spoiled milk. But I’ll need a new fridge in 1-2 years.

  • Rose says:

    can anyone tell me how it works on taxes when you make money from surveys? Thanks

    • Lisa says:

      You have to claim all earnings on your income taxes. The amount of taxes you’ll actually have to pay on that money depends on your income bracket and a lot of other factors.

    • WilliamB says:

      It’s income and is supposed to be self-reported to the IRS. There may be an official rule about how much you need to earn before you have to report but I bet a lot of people don’t bother to report small amounts.

    • Doreen says:

      I checked into it and it needs to be reported no matter what the amount. I only do enough to get around $50 a year, but I report it. doing what is right is always worth it, no matter in how small of an area it is. And it really is not hard, especially if you use a tax software. Last year we used a free software and breezed through our taxes.

    • Rose says:

      thank you everyone. one other question….is it reported as income and also reported as bank account or is the bank account only to be reported if theres interest on the money?

  • since my house getting older, I signed up for Home Warranty insurance. Yes, we pay around $525 per year (or you can pay monthly payments) but if anything breaks, they will come and fix it or replace it at much lower cost. You only pay $60 fee in addition. Last year my AC broke twice as well as my oven. So it paid for itself plus it gives me peace of mind.

    • thar says:

      We don’t have the home warrenty, but I can certainly vouge for its practicality. When we moved into our home, the previous owner paid a 1 year warrenty for us. We never had to use it, so we let it expire. Five months later, our HVAC died in early winter. The original cost estimates for replacement hovered around (gulp) $7,000 (due, in part, to the codes changing and our needing to upgrade to the current standard.) Thankfully, God is so good, and one company spared us the full expense (knowing we are a single income family) by only upgrading the coils in our furnace to standard. He saved us $3,500 in doing so. We paid cash for the rest, using the “new furniture” money we had worked so hard to set aside for our new home. Oh well, I can be content on “new to us” furniture, and I am. 😉

      • thar says:

        As for saving into our emergency fund, all loose change goes into ours, as does most savings realized through couponing, sales, etc. We simply drop in the jar what we would have had to spend on retail, any time we’re blessed by a better deal.

    • Mrs. W says:

      We just bought a house this past year and are definitely planning on getting another home warranty when our first year expires. We are on a very tight fixed income and having the warranty has brought a lot of peace of mind that we won’t have to empty our savings for a single repair, and we have a year to save for the warranty. So far this year, the warranty has saved us a lot of money due to have plumbing issues several times that we only had to pay the copay for.

  • demetria says:

    Eat down the pantry or freezer for a while, getting creative with making meals using only ingredients you already have. When we were getting out of debt, we did this every few months to budget as little as possible or even nothing for groceries. Gets some found money fast! Also, we had a few little kids at the time, so I would sell their used clothes to a consignment store and use credit to buy what they needed. Lots of ideas if you are willing to get creative and serious about reaching your goal.

  • L says:

    Having an emergency fund is obviously better than not having one (as you mentioned)…In our first year of marriage we didn’t have much, if any, spare money and we encountered some pretty big household expenses that were unfortunately beyond repair… furnace, hot water heater, water softener, washer, dryer, and a new-to-us vehicle. That was a hard year! It took a few years to establish a moderate savings account that we now keep for any unexpected things that might crop up.

    Right now we have a vehicle in need of $2,500 worth of necessary repairs…and we are hoping that we can handle those repairs (although it still hurts 🙂 we know that if we need to, we have a savings account as a backup.

  • Jennifer says:

    I’m curious to find out how specifically you’re saving money outside of tax refunds? We are also on a tight budget but are a two-income household and never get a tax refund so we’ve got to save from our regular income. We’ve got somewhat healthy retirement savings in 401k accounts but our emergency fund has been really hard to build.

  • I have recently gone back to work after a decade as a stay home mom. I have a simple plan to increase our emergency fund. I get my paycheck direct deposited into a savings account. On payday I move the money to my checking. The catch is that I round down to the nearest hundred. I leave the rest in savings. Sometimes this is as little as 10 or 11 dollars. Sometimes it’s as much as 90. That amount grows each and every payday!!!

  • Joye says:

    Thank you so much for this article Crystal! The last paragraph hit me really hard. I have been incredibly stressed lately as we’re trying to fund over $2,000 in needed repairs for my husband’s vehicle. We had about $2800 in the bank, but I consider $2500 to be our “emergency” money because heaven forbid anything should happen to our home, that’s our deductible. But God has always provided for us when we were desperate, so I really need to be worrying a lot less and rely on Him, not myself. Right now we’re cycling through a “no spend” 30 day period, then a “spend” month to stock the pantry again, and another “no spend” month to try to save enough to keep ourselves afloat. At least we HAVE the money in the bank to take care of it and we’re not putting in on credit cards or organizing payment plans just so that we can drive ourselves to work and back. :/

    • Jessi says:

      “But God has always provided for us when we were desperate, so I really need to be worrying a lot less and rely on Him, not myself.”

      Look, I believe in God too, but it’s not practical to just sit at home and twirl your thumbs and say He’ll take care of everything. You and your husband need to do your part as well.

      • Joye says:

        well I’m pretty sure I made it clear that we have a plan to save the money we need, we’re not irresponsible with our money. I just meant that I need to stop freaking about where the money is going to come from because we always have what we need because God gives me the aptitude to stretch our budget, or find what I need for a bargain price, or even on more than one occasion, the money just appears in the form of a bonus check from work, an overage from the bank, one time I even found a twenty dollar bill in my yard. I don’t expect my husband’s truck to be magically fixed without funding, but I do know that having faith is important and that one way or another, through hard work and His blessing, we’ll have the money we need if there’s an emergency.

        • Jenni says:

          Joye, I didn’t read your post as “twiddling your thumbs” at all. We’ve totally been in your place, and I think it’s great that you are doing things like having spend vs. no-spend months, even on your groceries. My husband has always had much more faith than I have in crises that God would provide (and we’ve had quite a few the past few years!), and then when He did, I would realize that he was right. I agree with you that often it comes in surprising ways. Lately I have been trying to write down the little financial blessings that have happened, and am surprised when they add up to more than I thought we had.

          At the same time, though, we are trying to minimize our expenses as much as we can and I’m trying to think of ways to generate side income so that the stress would be less on us were another emergency to occur. Those “little bits” can add up as well!

    • Thanks for sharing, Joye! And it sounds like you have a great plan in place to build those funds back up.

  • Amy says:

    Great post! Like others, I make small amounts of money doing surveys, and also consign outgrown/no longer loved kids’ clothing and gear. Fortunately, my daughter has a very generous grandmother, who loves to buy her nice clothes. This saves us on two ends: I buy much less clothing for her, and then make money selling it when she no longer fits into it.

  • Love this post! We were so thankful to have an emergency fund in place when hubby was laid off for four months. We sell quite a bit on Craigslist to make extra money right now as we work to rid the house of stuff we don’t use, want or need anymore. Off to check out your blog! 🙂

  • Amie says:

    If I’d had an emergency fund years ago, I would have saved myself a lot of credit card debt. Somehow, I thought that credit cards were my back up, my “I can help out others” money, my “oh I deserve that” money, etc. Well anyway, I am still paying off debts from years ago. I found Dave Ramsey through this site, a few years ago, and followed the e-fund suggestion. We put aside $1000 from our tax refund and had not touched it until now. I actually “borrowed” it to fund a family trip to visit the grandparents. My kids missed them terribly since they moved and my husband just got a promotion with a pay increase so I took a chance. I hope to repay it ASAP. I don’t want to be kicking myself over this. Having that e-fund gave me great peace of mind. I was fortunate that the grandparents are so very generous. They insisted on buying the entire family new clothes for work and school. The suit they bought my husband alone cost almost as much as my e-fund so maybe I can tell myself that this was a good idea… nah, I would never spend that much. lol.

  • Laurie says:

    A great way to expand your emergency fund is open a Roth IRA. You an always touch the principal,but not the interest. My IRA is growing at over 8%. I started a little late at 42,but hope to max it out every year for the rest of my working life. So that is how I fund my emergency fund. Every time a get $1000 saved up I automatically transfer it over to to my IRA. BTW I am single so I can fund $5,000/yr. I also get a tax refund of about $4500 a year so most of that goes into fund my Roth.

  • C.j. says:

    I use iphone apps to help earn money. Some of my favorites are checkpoints, receipt hog, check 51, ibotta, and shopkicks My favorite so far is receipt hog. If I have to spend it might as well to take a picture of the receipt and earn points! The ones that have paypal cash outs are the best since that goes directly into the emergency fund. Social media like Facebook is also great for on-line yardsales as. I was always raised to side hustle of some type. Like others I use a spare change account too. I roll all my spare change or money from recycling cans and put the money in it. If I’m cleaning out the house I’ll donate some things to Goodwill but I’ll also use sites like to sell unwanted movies I don’t watch any more. To me there’s always a way to make money. Finding the ride side hustle is the key

  • Joanne Peterson says:

    This is one thing I have not seen yet. We use check-out 51 and savings star for food savings in addition to coupons and those direct deposits and checks go into savings. Since the food already was paid for, I never miss those checks when I get them.

  • Jenni says:

    One thing I haven’t seen mentioned yet here is selling plasma. I think Crystal did a post on it once, and mentioned it to my husband as we have been in a tight spot lately (I used to do it in college, but can’t right now because I am pregnant). We got an advertisement in the mail to receive a bonus for going in, so my husband decided to try it. We figured that it was a good temporary way to generate some cash, and the person going in gets to sit there for a couple of hours and read, which for us as busy parents is actually welcome! In two visits my husband received $110 with the bonus, which I then used for groceries, menu plan in hand.

    I don’t know if we would do it every week/year-round, but it is something that would help every now and then to beef up your emergency fund.

    • Janelle says:

      My husband and I also both used to donate plasma, and if we went twice a week we’d make $60 (per person) after the initial promotional period of $100 per week. For me that was a total of 4 hours a week stretched out on a bed and since they had free Wifi available, I spent my first week’s payout to buy myself an $80 tablet from Big Lots and then used that as my “me time”, just watching tv shows on Netflix, or catching up on blogs I follow. It really was nice to have a little break from my kids and not feel guilty about it, since I was being paid for me time! My husband really appreciated having cash in his pocket that he could spend however he wanted (and could buy me “just because” presents without me seeing the transactions on our bank account!).

  • Libby says:

    I find the setbacks ring true for family. Just when I think we have started to get ahead, we have a car issue or home issue that requires us to use what’s in our emergency fund. It feels rather stressful to use it even though that’s what it’s there for; I am accustomed to having more in an emergency fund than what is there in this season of our lives because I was working full time and now am at home with our beautiful daughter.

  • Jen Harris says:

    Great article, Crystal. Like you, we have very little wiggle room in our budget. It’s a challenge to build/keep an emergency fund, but so important! Thank you for sharing this info/encouragement!

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