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3 Tips for Rebuilding Your Emergency Fund

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Rebuilding Your Emergency Fund AffinityFCU Blog
By: Jacqui Kearns
Chief Brand, Strategy, and Wellbeing Officer

About a year ago a troubling – but for many, and unsurprising – statistic circulated in the media: 40% of Americans don’t have $400 in the bank for emergency expenses.1 In the context of a then-strong economy, this was a wake-up call to the precarious finances of many families and the need to save.

Today, this is a dire challenge for millions of people as the COVID-19 crisis shuts down businesses and unemployment rises to levels not seen since the Great Depression.2 Even families with far greater financial cushions have seen their reserves quickly deplete – not because of an emergency like a car breaking down or needing home repairs or urgent medical needs; they’re using savings to simply put food on the table. Those who are struggling likely consider the concept of rebuilding their emergency savings as impossible, and for good reason, but it’s something you can start thinking about as our economy regains its footing over the next several months. Here are three ways you can start to replenish your emergency fund.

1. Rethink how to budget: Normally, rethinking your spending priorities would be a first (and relatively straightforward) step on your path to rebuilding your emergency fund. In the current crisis this may not be an option, as budgets are consumed not by vacations or dining out but by food, clothes and paying the bills. But some creative thinking about where you can cut spending can help save money that can go toward emergency funds. In normal times, entertainment costs like restaurants and going to the movies would be the first things to go when trying to save. Since in many states restaurants and theaters are closed, these aren’t options anyway. That said, you still might be ordering takeout too often, or paying for too many streaming services. It may feel like you’re already living frugally, but there still could be places to cut. Now is also an ideal time to do a thorough audit of all your expenses – for instance, looking at all the subscriptions you pay for and more closely scrutinizing your credit card bills.

2. Ask about relief on payments: Other than food, your monthly bills are the most urgent and – in normal times – inescapable expense. If you’ve been laid off or otherwise seen your income suffer because of the COVID-19 crisis, the thought of paying rent, phone and internet service, electricity, gas or auto insurance can be daunting, if not financially impossible. Thankfully, many providers have stepped up during this difficult time to waive or offer discounts on essential services. Other providers are willing to negotiate monthly fees. And some states are taking action to help; the Governor of New Jersey, for instance, ordered landlords to accept tenants’ security deposits as rent to make up for payment shortfalls or to pay in full3 Though the actions of some are no guarantee in any individual case, it’s worth asking your service providers about ways you can reduce or eliminate your monthly payments, especially if you no longer have a reliable income.

3. Put your emergency fund into a savings account: If you do manage to save some money, now is a good time to put it into a savings account, for two good reasons. First, putting money into savings – where it’s protected from anything you may have on direct debit or from your own ability to simply write a check to pay for something – has the psychological benefit of placing that money out sight and out of mind, meaning you’re less likely to spend it. Secondly, a savings account allows you to accrue some interest on the money you’re putting away. Of course, with interest rates at an all-time low, it doesn’t pay as much to save as it used to. That’s why Affinity created the SmartStart Savings Account, which allows you to accrue a dividend rate of 2.00% on balances below $2,500. This inverted savings account is a unique financial product in that your dividend rate only begins to fall once you’ve accumulated a certain amount – in this case $2,500 – making it ideal for savers on a budget. Affinity’s other Savings Account offerings include Certificate Accounts, which allow you to earn guaranteed fixed rate dividends on savings over a 15 or 30 month term. This option allows you to build up more savings over the longer term.

The COVID-19 crisis and its economic consequences will likely strain people’s finances for a long time to come, and there are no easy answers for coping and getting out from under these troubles. But following these tips – if your financial situation allows – is a good first step to ensuring you have a cushion against further financial disruption.

For additional information and updates from Affinity about COVID-19, please visit're-here-for-you.aspx


This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from

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