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I Depleted My Emergency Fund In 2020: Now What? 

Casandra Andrews  |  January 11, 2021

If you burned through your emergency stash this year, don’t panic. Here are 10 ways to build it back up starting now.

If you depleted your emergency fund in 2020, you aren’t alone. A recent survey estimates that as many as 46 million Americans have burned through all of their savings since COVID-19 began wreaking havoc in the United States last year.

If you’ve never had an emergency fund, financial experts say you absolutely need one to protect yourself if something unexpected happens. Your fund should include three to six months of living expenses in a separate checking, savings or money market account that you have easy access to. (Here’s our HerMoney How-To that contains absolutely everything you need to know about emergency funds!)

Having cash on hand helps keep you out of debt if, for example, your car is totalled or your high-deductible health insurance leaves you with an ER bill in the thousands of dollars. With an emergency fund, you can pay for the expenses without going deeper into debt by using a credit card or taking out a high-interest loan.

If you drained your emergency fund last year, don’t fret. We build them up so they’re there for us if we need them. But now it’s officially time to start rebuilding (or building) your reserves. Our financial experts offer these smart strategies for how to accomplish just that.

Direct your stimulus and tax refund to savings

When the government gives us money we don’t need right this minute, sock it away. Take advantage of the most recent $600 stimulus payment most Americans began receiving at the end of 2020, to kick-start your savings.

Same goes for your tax refund, if you get one. Move the money directly into a separate account so it’s more difficult to access when the urge for a late-night online spending spree strikes.

READ MORE: Stop settling for paltry interest rates on your savings. Compare high-yield savings accounts and put your money to work making more money today.

Negotiate a better rate on your checking account

Fees on a checking account can average nearly $15 a month. Call your bank or credit union and find out how to waive the fee and keep that extra dough for your emergency fund. Some financial institutions offer free checking perks if you work for certain employers. Ask if you qualify. If you do, that could equal another $180 in savings per year if you save $15 a month.

Take note: There are plenty of other on-line and brick-and-mortar banks that offer no-fee checking, including Ally, and Capital One 360 Checking. Check out this guide from CNBC for the best no-fee checking accounts.

Strategically use grocery delivery

While having groceries and other household staples delivered to your door before COVID wouldn’t have been deemed a necessity, things have changed. Now, an estimated one-third of Americans have used grocery delivery. If you’re one of them, there are ways to save, says Charles H. Thomas III, CFP, founder of Intrepid Eagle Finance.

Avoid small orders and look for in-app sales to help balance the convenience with the cost. Also, try to keep an eye on exactly when you order. Consider requesting an off-hours delivery time since some services charge a premium for high-demand times, like Sunday evenings.

Take a streaming break

Research shows that the average American subscribes to three streaming services. We’re looking at you Netflix, Hulu, Spotify, SiriusXm and Discovery Plus … But the truth is, we can’t possibly watch enough shows and listen to enough music to make it worth all the money.

If you cut just one streaming service, you’ll still have plenty left to watch and more dollars to add to your emergency fund every month, Thomas says. For example, if you cancel Netflix, you could potentially save about $13 a month or $156 per year. As an alternative, check with your local library to see if they offer free or low-priced streaming movies and television shows.

READ MORE: Rome wasn’t built in a day and nor should your emergency fund: Here are four easy ways to start saving today.

Make sure your phone discount is active

If you get a discount on your cell service because of where you work, many mobile phone companies, including Verizon, now require customers to show proof of employment every 12 or 18 months to keep the lower price in place. If your deadline to prove employment fell during the COVID-19 pandemic, you may be leaving money on the table every billing cycle. For example, if you have a 20% discount and typically pay $150 for monthly service, that’s $30 per month (or $360 a year) you could be saving.

If your billing statement shows the discount is no longer being applied, call the carrier or set up a virtual or in-person appointment to show proof of employment and reclaim your discount. If you lost your job during the pandemic, ask about other billing options and discounts. See if you can switch to a lower-priced plan. If you can’t get a better deal, and you are no longer under contract or paying for a phone, it may be time to switch carriers.

Marie Kondo your stuff

If you’ve a hard time saving for an emergency on your current salary, try listing household items such as furniture, video games, clothing and computers that you no longer want online. Sites such as eBay, Facebook marketplace, OfferUp or letgo are great places to start, and we have a full rundown at HerMoney on The 5 Best Places To Sell Your Stuff Online. Just remember to know your audience. (For example, don’t sell upscale clothing and accessories on Craigslist when they could fetch way more on PoshMark.)

When you declutter, says Vrishin Subramaniam, a financial planner and founder of CapitalWe, it’s a win-win because you are clearing out your space while also helping someone who needs things for a low price. Any cash you make, he notes, should go directly into your emergency fund. If there are items that don’t sell, consider donating them to charity.

Tame your thermostat

Slip on a cozy sweater, add another log to the fire and crank down the heater this winter. A U.S. Department of Energy study found that by turning your thermostat back just 7 to 10 degrees for eight hours a day can reduce heating and cooling costs by as much as 10% per year. Same goes for turning off the lights when you aren’t in a room, unplugging kitchen appliances that don’t get used every day and being more aware of energy losses in general, Subramaniam says.

Downsize to one vehicle

If one of the adults in your household is now permanently working from home, you may want to consider downsizing to just one vehicle. Leo Marte, a certified financial planner and founder of Abundant Advisors in North Carolina, says his family did just that. They saved on taxes, insurance premiums and maintenance. The added bonus? Receiving a lump sum to put in the bank when the other car sold.

Another idea for those in multi-vehicle households where there may be more vehicles than those who are old enough to drive them is to sell an extra car to enjoy similar savings.

Shop around for new home and auto insurance

The best way to get a better deal on home and auto insurance is to comparison shop online or by phone and then move to an equal but less expensive policy. Members of the private HerMoney Facebook group love to share stories of how they spent a few hours shopping around and saved hundreds on their annual auto insurance premiums. Insurance experts say the biggest savings come when you switch plans. (National insurers such as Allstate are currently advertising discounts just for being a new customer.)

Find side gigs

If you have the time and motivation, you can go online to seek side hustles or look in your own neighborhood to provide services for cash such as offering lawn maintenance services, and outdoor painting or fence repair, depending on the season and where you live. Besides food delivery and providing transportation through Uber, other popular part-time work for those with flexible schedules include dog walking, pet sitting, tutoring, babysitting and music lessons.


LET’S TACKLE THE NEXT STEP… TOGETHER. Own your money, own your life. Subscribe to HerMoney today for inspiration, advice, insights and more!

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