how to build an emergency fund with no money

Having an emergency fund is extremely important during times of uncertainties, so you may think this is the worst possible time to find out how to build an emergency fund with no money, given well… we already are in an emergency.

Quite the opposite! Today is the perfect time to start an emergency fund.

And if you’re wondering how to build an emergency fund with no money, keep reading for some practical ways to build your emergency fund.

Emergency fund – the basics

Before we go through some practical and actionable ways to build an emergency fund with no money, let’s just review what an emergency fund is:

What is an emergency fund

As the name suggests, the emergency fund is a sum of money you can use to cover for unexpected and unplanned expenses or a sudden loss of income.

And if you’re wondering, do I really need an emergency fund? The answer is YES!

Having an emergency fund in place when something happens makes sure you don’t need to use credit cards or high interest loans to face the expense, and it will save you loads of stress.

After all, things do happen, so we might as well be prepared for it!

What classify as an “emergency”?

An emergency is an event that you couldn’t anticipate it would happen. For example:

  • Bereavement
  • Broken fridge
  • Job loss
  • Car fault

What all the above have in common is that they were unexpected. For this reason, your kitchen renovation, a holiday or car MOT do not class as emergencies and should not therefore be paid with the emergency fund.

Having said that, there is no emergency fund police and you can do whatever you want with your money, but that’s the recommendation in the personal finance world.

How much should you have in an emergency fund?

how to build an emergency fund with no money

Lots of people advocate for £1000 emergency fund, and I agree that should be the bare minimum.

However, it’s important to have a think how much £1000 would actually cover. Often not much.

A more appropriate emergency fund should be something in the region of 3-6 months’ worth of expenses.

I know it may seem daunting to save that much money, but it will be a lot easier with the recommendations below.

And also, once you’ve got that saved, it’s done, you won’t have to do anything else! That is, if you don’t have any emergencies.

But that’s what we all hope right?

How to build an emergency fund with no money

Here are some easy ideas you can implement immediately that will help you build your emergency fund in no time

Define your emergency fund amount and add it to your budget

The most important thing to do is to define how much you want to save and add it as an item line to your budget.

This way, you can easily move all the money you’re saving into the emergency fund budget line.

To do that, you will need to be aware of how you spend your money and you will need to have a budget.

Related: how to take control of your finances for free and easy budgeting strategy for beginners

Pay yourself first

Once you have figured out the amount you want to save (£100 a month for example) and all your fixed expenses, it is important to pay yourself first.

This means, as soon as your salary/income comes into your bank account, you move that £100 in a separate account.

Waiting to move that money until later in the month or maybe at the end of the month is extremely risky because you will likely spend it. You might think you wait ‘just in case’ but that’s exactly the point of the emergency fund, to cover the ‘just in case’.

If you leave your cash in the main account, you will feel you have more money to spend throughout the month.

The best thing to do is to set up an automatic transfer, most banks do that, so that you avoid the temptation altogether.

Automate all your payments

Make sure all your bills and recurrent payments are all automated if possible, for example via direct debit. This way, you’ll avoid late payment fees or going into overdraft, which will cost a fortune for nothing.

If possible, try to get all your direct debits set up for the first of the month (or whenever you get paid monthly) so that once all those bills are paid, you’ll know exactly how much you have got left to spend on the rest.

Most companies don’t want you to change your direct debit dates (more admin for them) but they will definitely do it if you ask!

You also might want to consider changing the frequency of payments to monthly for 6-monthly or yearly bills when possible. This will help have a consistent list of expenses each month, and it will be easier to stay in budget.

Shop around for your bills

Remember to shop around before automatically renewing your contracts. This will save you loads in the long run, and all this money saved could go towards your emergency fund!

Use comparison sites or call your provider to make sure you get the best price

You can also use my Bills tracker to remember when all your bills are due for renewal and make sure you don’t overpay any of them. It’s available for free in my Freebies Library.

Related: Manage your bills with the Editable Bills tracker


Pause other money goals

If you’re anything like me, there are loads of things you want to buy and are currently saving for: a nice holiday, a tablet and a present for a family member, just to name a few.

However, to build an emergency fund as soon as possible, you might want to consider pause these money goals for the time being. This will help you build your emergency fund as soon as possible.

After all, being able to face uncertain events is more important than the nice holiday you want to buy, don’t you think?

Collect all your spare change

I know what you’re thinking, but collecting all your spare change could make a difference. Think about all the coins at the bottom of your bag or scattered around the house (or in the sofa!), they all add up!

Master your meal planning game

Meal planning is so important if you’re looking to save money, in order to build your emergency fund.

Meal planning saves you from last minute takeaway because you don’t know what to cook.

When you get organized before going shopping, you plan your meals based on what you already have at home, and you’ll only buy what you need.

This means you won’t find yourself with ingredients that don’t go together or don’t know how to use, which will inevitably end in the rubbish.

By planning your meals, you will save money and reduce waste, which is basically wasting money!

Yes, you will need to do a bit of work upfront, to plan your meals and write a grocery list, but think how much money you’ll be able to put towards your emergency fund!

Cut on expensive stuff

how to build an emergency fund with no money

I am no advocate for cutting everything from your life to save more money, because I think it’s not sustainable in the long run.

We all should enjoy a dinner out, an evening at the cinema or a new dress… if they are in the budget!

However, if you’re serious about building your emergency fund quickly, you should consider temporarily cutting down on some non-essential expenses, for example:

  • Gym membership
  • Magazine subscriptions
  • Buying new clothes every month
  • Weekly brunch
  • Drinks at the pub 3 times a week

Now this doesn’t mean you can’t go to the pub ever again, you just reduce to maybe once a week, or invite your friends over for a drink instead of paying for expensive beers at the pub.

And if there is a big purchase you have to make, why not trying to use cashback sites like Topcashback? Check out how I got a brand new laptop for £100 using this cashback site.

Find more advice on how to save money when you shop online here.

Create your own challenge

You could even take it up a notch and create your own challenge, like a “no spend month”, where you don’t spend any money except for necessary stuff (groceries, bills, etc) for a whole month.

Or you can challenge yourself to save an extra £10 a week.

If you fancy trying one of these challenges, there is an amazing community on Instagram ready to support you and full of people going through their own challenges. You can search this community using the hashtag #debtfreecommunity

Be comfortable with saying no

This is probably the hardest thing you’ll have to do if you want to save money to build an emergency fund.

In order to achieve your goals you’ll have to start saying no, to friends, family and often to yourself.

Whenever I struggle and find myself thinking ‘oh well what difference will it make if I buy that dress, or go out for drinks’, I like to remind myself of this quote:

‘Get into the habit of asking yourself, does this support the life I am trying to create?’ – Irisa Yardenah

Where to put your emergency fund

Your emergency fund should be stored in a separate bank account to avoid the temptation of spending the money you worked so hard to save for, but it should be easily accessible in case of, well, emergency.

Some banks like Monzo allow you to set up pots. These pots are still part of your bank account, however they are separate from your main account, and the money cannot be spent with your debit card or online. You will need to log into the app, and manually move the money to your main bank if you want to use it, that should be enough to stop you and reflect!

Alternatively you can open a separate bank account or a savings account; some on the market pay interest which is a great way to give your emergency fund a little push, however it is important to be able to access your money when needed so don’t lock your fund into a 6 months (or longer) saving account, just to get higher interest rate.

A final recommendation on how to build an emergency fund with no money

Even though it seems impossible to build an emergency fund with no money, it is really possible, it just needs a bit of work and commitment.

It might take longer than you originally planned to reach your amount goal, and you might slip and spend some of that money for something not necessary, and that’s ok!

Be kind to yourself and go back to your original plan the next day.

And in the event you need to spend your emergency fund for an expected event, don’t beat yourself up and feel like all your efforts have gone to waste. That’s the opposite: emergency funds are there to be spent if necessary.

You have built yours once and you’ll rebuild it again!

If you have any questions, please comment below, send me an email or contact me on Instagram, I’d love to help!