We Could All Use an Emergency Fund — Here Are 6 Effective Ways to Start Building One

As we’re all well aware, life is filled with uncertainty. And when unexpected — and costly — expenses arise, having a “rainy-day fund” at the ready can prevent a lot of financial headaches.

But while most Americans may recognize the importance of having an emergency fund, making the stockpiled savings a reality can be a serious challenge. In fact, according to a 2021 report from the U.S. Federal Reserve, nearly four in 10 American adults surveyed in November 2020 reported that they would be unable to fully cover a $400 expense with cash or its equivalent. (Among these consumers, the top option for paying off such a surprise cost would be to put the charge on a credit card and carry the balance.)

A quick emergency fund 411

Before getting started on their saving, many consumers may wonder “What is an emergency fund exactly?” and “How big should an emergency fund be?” The quick answer to the first of these questions is that an emergency fund is a sum of money that has been set aside to cover the financial surprises that life can bring — and help eliminate the stress that comes with being unable to cover such surprise bills. And regarding how large the stockpile of money should be, a common rule of thumb is to have enough savings on hand to cover three to six months’ worth of household expenses should your income be stopped or interrupted.

6 ways to start saving

Wondering just how to start building an emergency fund for yourself? By looking for opportunities to slowly and steadily put money away, you can create a more secure financial future for yourself and your family — and enjoy the peace of mind that comes with knowing that you have a financial safety net.

Consider these six effective ways to start setting money aside for a rainy day and to gradually build up your emergency fund over time:

  1. Create a budget — Creating a household budget that outlines the critical expenses (including bills, loan payments, etc.) you must cover each month and the income you have available to cover them is a good first step to take. By doing this, you can get a much better idea of how much you can afford to set aside each month. After tallying your total expenses and subtracting them from your monthly income, you’ll get a figure that shows how much discretionary income you have available each month. Use this number to set a monthly savings goal for yourself. (Of course, it won’t be realistic to try to save all of your discretionary income each month — so be sure to give yourself some wiggle room. But by setting a goal of saving half or a third of your discretionary income each month, you’ll greatly increase your likelihood of actually setting some funds aside.)
  2. … and trim the fat — Reviewing your monthly household expenses while creating a budget also offers a great opportunity to look for savings opportunities — and by seizing them, increase your monthly discretionary income. Could you save money by opting for streaming services instead of paying for cable television? On that note, are you currently paying for streaming services that you seldom use? What about splurges — could you cut the number of visits to the coffee shop you make each week by brewing your own coffee? And could you cut the number of meals you eat out each week by packing your lunch more often? Any regular expense that you can reduce marks an opportunity to put more money into your emergency fund each month.
  3. Make savings automatic — If you (like many Americans) have both a checking account and a savings account in place, having your bank link them can enable you to set up automatic cash transfers each month — which can be a great way to save money while avoiding the temptation to spend it. For example, by arranging an automatic transfer of a set amount of funds from your checking account to your savings account each payday (or shortly thereafter), you’ll be able to build up your savings without the transferred funds ever even appearing (or residing for long) in your checking account. And as the “out of sight, out of mind” saying implies, this can make it much easier to avoid being tempted to spend any of the transferred money.
  4. Keep the change — If you regularly use cash to make your everyday purchases, saving up the change from each of your purchase transactions can help you gradually build up your emergency fund without having to make substantial financial sacrifices. To facilitate this, designate a place in your home to store all of your loose change at the end of each day, such as in an empty jar or cup. Once the jar or cup fills up, bring it to your bank for deposit into your savings account. While the amount of daily savings generated will likely be small, over time the funds set aside can add up to significant amounts. And to take the tactic a step further, consider rounding each of your purchases up to the nearest multiple of $5 or $10 so that you’re also adding small bills to your loose change, which can help you bulk up your emergency fund even faster.
  5. Put away any windfalls — Most of us have unanticipated money land in our laps from time to time, such as when we receive a tax refund, an inheritance check or a holiday bonus from our employer. And when these windfalls occur, it can be tempting to treat ourselves to a spending splurge. But by setting aside at least a substantial portion of the “found” funds and putting it into savings, you can quickly grow the size of your rainy-day nest egg.
  6. Find ways to supplement your income — Another way to quickly build savings to bulk up an emergency fund is to take on a side job or to find ways to make money off of a hobby. Options here can include things such as teaching an exercise class on the weekends, doing yard work around the neighborhood, or selling arts and crafts at a local farmers market. And by putting the proceeds from such supplemental income directly into your emergency fund, you can build it up quickly.

Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.


Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.


Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:


Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.


Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.


Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.


  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.


Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.


Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.


Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.


Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.