March 10, 2021

How to Get Back on Track After Spending Your Emergency Savings

You had emergency savings and found yourself needing it. You were thankful you took the time to build your savings, but now it feels like starting from square one all over again, and after weathering a financial situation that necessitated the need for your emergency savings, the idea of getting back on track may feel overwhelming.

Begin Paying Yourself First Again

If you’ve had emergency savings you had to use, you know the importance of that savings being there. Whether it was due to a job loss, home or car repair, or medical emergency, it’s likely that your work to create a safety net was well worth the effort, but it can also feel disheartening that you now need to rebuild. Once your financial situation has stabilized, look at your budget and begin paying yourself first again. Consider the amount of your take-home income and make a plan for a portion of this money to move into your savings every month. If you can, set up to automate this process before it hits your checking account. Of all the easy ways to save money, this is one of the easiest because you don’t need to think about it. After a period of financial instability, when you’ve likely been depriving yourself of all but the necessities, it can feel tempting to treat yourself. While small indulgences can be good motivation, focus on using your income to rebuild your safety net first.

Start with Small Goals

After using your emergency savings, you may feel frustrated. Likely, there was a sense of pride and accomplishment over having an emergency savings, and now you want that account replenished quickly. But take a deep breath. You won’t rebuild overnight, and setting small goals is the right way to start. First, begin with a cash cushion. This doesn’t need to be much, but just a small amount that you can confidently set aside each month while still paying your expenses. Then, aim to get to a balance of $1000. Having an emergency account of even this much can be enough for the short term. Once you have $1000, set your next goal. If a full month of expenses feels too daunting, set a goal of half that. Once you meet that goal, set the next, with an ultimate goal of 3-6 months of expenses in a savings account. Meeting these small goals little by little can give you the confidence to keep going.

Easy Ways to Save Money and Rebuild Your Emergency Savings

There are some easy ways to save money, which can help you rebuild your savings more quickly.

Revisit Your Budget

Take a look at your monthly budget, make sure the income and expenses are current, and look for places to cut expenses-even if just for a little bit of time. You may find some areas that can be trimmed, simply because circumstances have changed. Take that money and allocate it toward your emergency savings while you rebuild.

Track Your Spending

Look for small expenses that you can cut. If you find you’re getting take-out more than you realize, you can cut that down easily. Maybe you can stretch your grocery budget for a month and ONLY buy absolutely necessary things. It may surprise you on how long you can actually go between grocery trips.

Bring in Some Extra Cash

Combine a cleaning and decluttering session at home with a chance to make some additional cash. Selling items you don’t use on various online sites can add up! If you have a chance for extra work, grab it. Babysitting, pet sitting, and odd jobs can all contribute as you rebuild your savings.

Having an emergency savings account is crucial to good financial health, and more importantly, avoiding emergency debt. Without an emergency savings account, it can be easy to slip into the debt trap, and finding your way back out can be more difficult than rebuilding a savings account. Incorporating some easy ways to save money may be all you need to get back on track. We can help. Contact Safe Money Partners for a guide to debt-free living.

photo of Jeff Mohlman

By Jeff Mohlman

Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.