How to build an emergency fund using budgeting apps

Building an emergency fund is a crucial part of financial planning. With the help of budgeting apps, it has become easier to save money and build an emergency fund. This article will discuss the characteristics of an emergency fund and the general steps for building an emergency fund using budgeting apps.

What is an emergency fund?

An emergency fund is a reserve of money that you set aside to cover unexpected expenses or loss of income. It acts as a financial safety net and can help you avoid debt or financial hardship in an emergency. The following traits describe an emergency fund:

Liquid: An emergency fund should be readily available and liquid so that you can get the money quickly if needed. This is why most money experts recommend putting your emergency fund in a high-yield savings or money market account.
Adequate: Your unique situation will determine how much money you need in your emergency fund. However, most experts advise keeping three to six months' worth of living expenses in reserve as an emergency fund.
Separate: Keeping your emergency fund separate from other checking or savings accounts is crucial. This will prevent you from inadvertently using your emergency funds.
Regular replenishment: If you spend your emergency fund, it's critical to replenish it quickly. To make sure your emergency fund is ready for the next unexpected expense, set a goal to rebuild it.

Always manage your own money.

You must surround yourself with a team of people smarter than you, but you make the decisions.

—Dave Ramsey (@DaveRamsey) April 27, 2023

Steps to Build an Emergency Fund Using Budget Apps

Here are some steps to build an emergency fund using budget apps:

Set a savings goal: Find out how much you need to set aside for an emergency fund. Save at least three to six months of living expenses, according to experts.
Track your spending – Use a budgeting tool to monitor your spending and find places where you can save. This will allow you to save more money for your emergency fund.
Automate your savings: Set up automatic transfers from your checking account to your emergency fund savings account using the app to automate your savings. This will force you to prioritize saving money for emergencies and will ensure that you regularly add money to your emergency fund.
Use the app's savings features: Some budget apps have built-in savings features that can help you save money faster. For example, some apps round your purchases to the nearest dollar and transfer the spare change to your emergency fund.
Review and adjust your budget: Periodically review your budget and make any necessary adjustments. If you receive a raise or bonus, consider increasing your automatic savings contributions to your emergency fund.

Budgeting apps that can help build an emergency fund

Here are some examples of budget apps that can help you build an emergency fund:

mint

With the help of the free estimate tool mint, you can control your expenses, make a budget and set savings goals. You can monitor progress toward your savings goals and set up automatic transfers from your checking account to your savings account. Additionally, Mint provides reminders when budgets are exceeded or an invoice is due, which can save you money by avoiding unexpected expenses.

5. mint

Personal finance management app to track expenses, create budgets and manage invoices.https://t.co/Fkmst2H13F

— Kunjal Kanabar (@kunjalkanabar) May 8, 2023

YNAB (You need a budget)

YNAB is a paid budgeting app that helps create a budget and track spending. It offers an "Age of Money" feature that predicts how long funds will last. The app encourages allocating every dollar to a job, such as allocating money for an emergency fund. Savings goals for the emergency fund can be set and tracked.

pocket guard

pocket guard is a free budgeting tool that allows users to track their spending and create savings goals. Users have the option to set up automatic transfers to savings accounts and create a budget. The app provides alerts for reaching budget limits and approaching invoice due dates. The “In My Pocket” feature shows the money available to put into the emergency fund.

every dollar

The free estimate tool every dollar was developed by Dave Ramsey, a personal finance expert. Its "Baby Steps" feature guides users through the process of creating an emergency fund, as well as allowing them to set and track budgets. EveryDollar also offers information on spending patterns and savings opportunities to increase your emergency fund.

personal capital

personal capital is a free app that can help you track spending, create a budget, and set savings goals. It also offers tools for investment planning and retirement savings. With Personal Capital, users can see a breakdown of their net worth and set up automatic transfers of savings to an emergency fund.