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The end to the COVID-19 crisis remains unclear, which means any emergency fund or savings account you’ve built to manage a situation like this might be running out, or is already depleted.

But, even if your emergency fund is being used up and it seems there aren’t enough incoming resources to go around, there are ways to make ends meet while you also continue to build up savings. Making the effort to rebuild your emergency fund, even during lean periods, can bring peace of mind as well as long-term financial stability.

We recommend a crawl, walk, run approach to building your next emergency fund. It begins with a series of shorter-term, high-impact measures you can employ now to build up savings quickly, followed by a structured, goal-oriented plan that establishes the pattern to set you up for long-term saving success.

Fast-Track Your Savings

You can employ a number of daily and monthly techniques in the near term, even with limited financial resources, that will help to fast-track your savings and restock your emergency fund.

  1. Prioritize your needs vs. your wants. Take a close look at your spending patterns when it comes to your needs and your wants, and be willing to prioritize and make some cuts in the latter. Needs include nonnegotiables like your mortgage or rent, utility bills, insurance and medications. Meanwhile, wants encompass optional costs like dining out, cable TV, streaming subscriptions, gym memberships, clothing and leisure travel. Giving up more of the items on your wants list may free up resources to save.
  2. Shop smarter. Reduce what you’re paying for needed and wanted items by taking advantage of discounted pricing, sales and coupons whenever possible. Time major purchases according to annual sales. And save money on groceries by checking your pantry before buying, making meal plans and shopping lists, choosing sale items and using coupons.
  3. Automate your savings. Amass reserves fast by automating the savings process through direct deposits or automated transfers. Set aside a certain amount to be saved automatically each month, then forget about it.
  4. Refinance your mortgage. Being able to take advantage of a lower interest rate on your mortgage might help you to save hundreds of dollars each month. But research your options thoroughly, by checking into the terms of your current loan, understanding how much you can save and shopping multiple lenders to net the best rate.
  5. Scrutinize your utilities. Look at your energy bill and see what changes might save you money. Similarly, switching your cellphone plan may also help you to cut monthly costs.
  6. Sell and borrow. Check around your home for items you no longer need or want that can be sold online or through local social networks and trade sites. And, consider borrowing items needed on a short-term or one-time basis instead of purchasing them – for example, infrequently used household tools and clothing for formal occasions – to avoid making those types of purchases.

Set up a Structured Savings Plan

Once you’ve adopted shorter-term, stop-gap measures to redirect funds for saving, you may be ready for a more integrated strategy to establish long-term saving habits. And a simple framework you can use to do this is the 50-30-20 budget, which helps outline how you intend to save, spend, pay off debt and achieve your savings goals. At the same time, this technique also helps to make the savings process easier and part of your routine.

To employ the 50-30-20 budget, you organize your expenses so that 50% of your income is allocated to your needs, 30% to your wants, and 20% to your savings, investments and debt repayment. Organizing your income this way helps provide greater clarity on all of your expenses.

One reason this budget works is because the targets naturally result in changes in spending and saving. Adhering to the proportions may require you to reduce your wants budget so you can put more money toward savings and debt. But as you pay off your credit card and loan balances, you should have more money left over for saving, investing and indulging in more of the items and activities on your wants list.

Track your progress once a month to make sure you stick to the goals you’ve outlined, and review your account statements to confirm that you’re on track. You’ll feel a sense of pride as you add to your savings and pay down debt, and you’ll be motivated to continue.

Eventually, with measures like these, you should see your emergency fund begin to rebound. Whether or not you need to dip into it in the near term, having this source of emergency savings again will help you feel more secure and be prepared to manage through unexpected expenses and prolonged events like the COVID-19 crisis.

This information and recommendations contained herein are compiled from sources deemed reliable, but are not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or are offering any tax, accounting, or legal advice.

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