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9 ways to build emergency funds using a high-yield savings account (HYSA)

What you need to know about preparing for unexpected expenses.

Building an emergency fund is one of your most critical financial defenses, so it should be a top priority. A good rule of thumb is to accumulate at least three to six months of living expenses.

Here are nine ways to build your cash reserve:

1. Create a spending plan

A spending plan or budget helps you decide how to spend money before receiving it. It should cover your necessary living costs, discretionary expenses and money for financial goals.

You might track your income and expenses using paper, financial software, an app or a spreadsheet. Use a convenient budgeting system that makes it easy to stick with it month after month.

2. Shop recurring expenses

Be vigilant about shopping recurring costs, like utilities, cable, internet, wireless and car insurance. Getting quotes might seem like a hassle, but it’s an easy way to cut expenses, so you free up more money to save. You might find your current provider is giving you a great deal, but you won’t know until you shop.

3. Avoid consumer debt

Having expensive consumer debt, like credit cards or payday loans, can make it challenging to save for emergencies. Make it a priority to pay down high-rate debts and add the savings to your cash reserve.

4. Negotiate debt settlements

If you have old debts, consider settling them for less than you owe with a lump sum or payment plan. Get any creditor agreement in writing first, or get legal help so you understand your options and what’s best for your situation.

5. Sell unused items

If your closets or garage are overflowing with stuff you rarely use, it’s time for a real-life or virtual yard sale. You might have jewelry, sporting equipment or collectibles that you could sell to raise cash.

6. Earn more income

Just about everyone can make extra money by creating additional income streams. You likely have skills for various jobs and types of work. Try something new to bring in extra cash for savings or paying down debt, such as:

  • Driving for a ridesharing or delivery app
  • Offering in-person or online tutoring
  • Getting a seasonal or second job
  • Doing house or pet sitting
  • Selling items on eBay or Amazon
  • Being a local or virtual assistant

7. Use cash windfalls

If you receive unexpected funds, like a cash gift, raise at work or income tax refund, use it to pad your emergency fund or reduce high-interest debt, depending on your situation.

Remember that you’re overpaying your taxes if you receive a substantial annual tax refund. By changing your tax withholding, you can pay less tax and save more throughout the year.

Once you begin saving money for emergencies, you may be tempted to invest it for higher returns. Instead of exposing your savings to risk, keep it safe in an FDIC-insured, high-yield or high interest savings account.

8. Automate savings

No matter your financial goals, automation is the trick to making saving a habit. It allows you to effortlessly set aside money and adjust to living on less. For instance, set up a recurring transfer to a high-yield savings account (HYSA) to build emergency money. Even regularly saving small amounts is better than nothing.

9. Earn more interest

Relatively small online banks usually offer the highest APYs because they don’t have the high cost of maintaining physical branches. The bank’s savings can be passed to customers through higher interest rates, allowing your money to earn more.

Opening a HYSA at a bank or credit union insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) protects your funds up to a legal limit. Both cover up to $250,000 per depositor per ownership category, such as individual and joint ownership.

Most HYSAs allow you to access funds through online platforms, mobile apps and debit or ATM cards. The ability to make withdrawals and transfers anytime makes it the perfect place for emergency cash and money allocated for short-term goals.

Like any bank or credit union account, opening a HYSA doesn’t affect your credit score. You’ll have to provide your full name, address, Social Security number and a government-issued ID to open one. Once your HYSA opens, you can link it to your checking account for easy withdrawals and transfers, including your initial opening deposit.

About the author

Laura Adams is a money expert and spokesperson for Finder. She’s one of the nation’s leading personal finance and business authorities. As an award-winning author and host of the top-rated Money Girl podcast since 2008, millions of readers, listeners and loyal fans benefit from her practical advice. Laura is a trusted source for media and has been featured on most major news outlets, including ABC, Bloomberg, CBS, Consumer Reports, Forbes, Fortune, FOX, Money, MSN, NBC, NPR, NY Times, USA Today, US News, Wall Street Journal, Washington Post and more. She received an MBA from the University of Florida and lives in Vero Beach, Florida. Her mission is to empower consumers to live healthy and rich lives by making the most of what they have, planning for the future and making smart money decisions every day.

This article originally appeared on and was syndicated by

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