Emergency Fund: How to Start One and Grow It

I am not the most financially sound person in the world. One thing I do know – is just when things seem to be going well something unexpected always seems to happen where money is suddenly needed.

money in suitcase

I make decent money and typically have “disposable” income to pick up a little of “this” or a little of “that“. Typically go out to eat once a week, and pick up some preparedness supplies. Kids needs clothes, car taxes need to be paid, prescriptions need to be picked up, etc.

Many people also constantly complain about being broke but the reality is they just spend money on frivolousness things. With the economy today and the future uncertain – we all need to take more seriously. If you already are – congrats as you are one for the few who do.

Experts generally recommend starting an Emergency Fund for those “just in case” moments. An Emergency Fund consists of a sum of money sitting in a bank account or other secure location which is to be accessed when some type of emergency comes up.

Money is a Prep All Its Own

Lots of preppers only see money as a means to an end. Meaning they view it as a method to get the things they need to be prepared, and not as a preparation in itself.

Sure, money can buy you backpacks, gear, weapons, vehicles and of course the obligatory mountain of supplies but I would not be too quick to spend all of your discretionary prepping money on other things.

This is because money is a prep all unto itself. Money gets things done. Compared to the things that you might buy with money is flexible, because money can be converted to goods, work or other things. Not everyone will trade in canned goods, camping equipment, gasoline or guns, but everybody trades and money.

This means that a smart prepper is going to keep a dedicated stash of money on hand as a survival prep right alongside everything else that we depend on. You make a mistake not having any survival supplies on hand, that’s for sure, but I believe it is just as egregious not having any cash money on hand either.

Financial Preparedness for a Disaster or Emergency | 3 Tips | Prepping for Non-Preppers

Money Will Probably Still Be Good After a Crisis

I’ll tell you one thing that really grinds my gears when it comes to discussions about money as a survival resource. There is a dedicated contingent of the prepping demographic that shuns the accumulation of cash money as a so-called liquid asset because they assert, loudly, that money “won’t be any good in a survival situation.”

Their reasoning goes that if you cannot drink it, eat it, shoot it or stay warm with it then it is useless for the cause. Survival, after all, is about the survival priorities and they maintain that when reality reasserts itself on all the sheeple in the aftermath of a major event but they will all readily take up with the new barter-based economy.

I suppose that this makes a certain amount of sense, but it is woefully shortsighted, even though bartering may well prove to be a viable method of exchanging value with other people under the same circumstances.

Here’s the trick. For money to be useless for anything but tinder an awful, awful lot has to go wrong, and go wrong pretty much everywhere in the nation at the same time. Chances are, that is not going to happen. Of course it could, but it is statistically extraordinarily improbable.

People will still want money in the aftermath of a major crisis, even if they are seriously in a bad way. Sure, if they are starving, freezing or dying of dehydration they will want to take care of those pronto, but you had better believe that money is still going to be on the minds of survivors.

Even if everyone in a given area or region is suffering together, people from outside that region, be they first responders, transporters or something else, definitely won’t mind making cash that they can take back home and put to use.

When You Need Vital Resources or a Favor

Then as now, cash is difficult to argue against. If you can splash enough cash on a problem, your problem will go away, even in a survival context so long as there are other people around.

You desperately need supplies or other resources that you are lacking? If somebody has them and is willing to part with them, chances are they will take cash for them.

What if you need a favor, particularly a dodgy favor? You got it, cash money works a whole lot better than pork and beans, and you won’t even have to resort to threats of physical violence.

And the best thing about cash compared to any other liquid resource that you might use in a value transaction is the sheer portability of it. It is easy to handle, versatile and convenient, and that is why cash currency is a technology that is in use pretty much everywhere around the world.

These advantages don’t just cease because things have gone badly. In fact, many people in the midst of the chaos will want to take advantage of it for their own purposes and be seeking to plus up their supply of cash, or else they will only want cold, hard cash when transacting. Don’t expect credit cards, checks or anything else to work or even be accepted for the duration

Considering Cold Hard Cash as a Physical Prep

You’ll look at cash a little bit differently when you start considering it a legitimate prep, meaning a physical item that has its own storage requirements. while nothing beats having cash on hand when you need it right damn now, keeping cash just sitting there, doing nothing, makes it vulnerable to loss or destruction and it also means your cash is deteriorating, value-wise.

Sure, your cash will increase in value and make you more money if it is sitting in a savings account, a mutual fund, on the stock market or invested in any number of other schemes and profitable ventures. However, when you need cash right away and it is tied up in any one of those investments or even in your bank you’re not going to be able to access it quickly except what you normally have access to through the use of an ATM, and even that will be highly dodgy under the circumstances.

This means that you must keep a sufficient quantity of cash on hand suitable to your purposes while also keeping it safe from theft, loss and destruction. You’ll have to go into this understanding that in essence you are paying for keeping that cash ready because the value of your money declines steadily over time thanks to our wonderful, competent government.

Regarding where you keep your cash, this is largely a personal choice. Some folks like to keep it squirreled away with all of their other survival gear such as their BOB or go-bag in case they need to run out the door at a moment’s notice. This way it will at least always be with you. Other folks prefer to keep it locked up in a safe or tucked away in a hiding place like any other valuables in order to keep people off of it, hopefully.

I will leave these considerations for discussion in another article about asset protection, but what matters most is that you keep this wad of cash intact so that it is there when you need it during a calamitous emergency. Don’t go dipping into it to fund your vacation, a new TV or any other luxury purchases. I mean, if you have to have it then by all means use it, but let us keep in mind while you put it there in the first place.

How Much is Enough?

One of the biggest questions I get regarding financial preparations for the purposes of disaster preparedness is how much money one should keep on hand.

This is another highly personal choice, and the answer might not satisfy, but I generally recommend as much as you comfortably can while still meeting your other financial objectives concerning investments and diversification.

As a baseline, I would shoot for about $500 if you’re on a tight budget, and if you have more money to spare aim for about $2,000. Having a couple grand to splash around when you need it can definitely get you favors. This can also go a long way towards procuring vital supplies, medicine or other resources when you are in a jam.

Now, if keeping this much money on hand as cash makes you nervous, you simply need to think through how you’re going to keep it placed and how you’ll keep it secured.

You might not feel comfortable walking around with that much money in your wallet, and in that case you should consider stashing it in another secure place such as in a money belt or another concealment that is unlikely to be separated from you under most circumstances.

Now – here is where I have to put a preparedness-spin on this topic. Depending upon the emergency which requires your extra money – having it sitting in a bank might not be the best location for it. If there is some type of power outage where “cash is king” – a debit card or check may not be acceptable forms of payment from many vendors.

Options? How about a fire resistant lock box at home – possibly bolted to the floor? Being able to get to cash at anytime may be important depending on what transpires.

Funding Your Stash When Times are Tight

I really want to impress upon everyone reading just how important cash money is as a prep for tough times. This can be discouraging when you are barely making ends meet or otherwise operating on a strictly limited budget. With so many competing obligations and requirements, funding even a small survival stash of cash might feel impossible.

Like I always say, as long as you are alive there is something you can do to improve your situation. If your existing income is spread too thin, your choices are to reduce expenses to free up cash so that you may fund your prepping activities, including the aforementioned stash of cash, or make more money.

If getting a new job or a promotion at your current job is out of the question, you’ll need to resort to the time-honored practice of moonlighting or developing your side hustle.

Whatever you do, make sure you put your extra income to good use. As always, where there is a will there is a way. Don’t give up on establishing an emergency prepping nest egg!

Ready To Start Your Emergency Fund?

My point with this post is if you do not have an Emergency Fund – start one. Set a goal – maybe $500. Stop renting movies, don’t go out to lunch so often, sell some stuff on eBay -whatever – just start saving. Once you reach your first goal – set another.

Many financial experts suggest having 6 months worth of expenses put back. That sounds impossible I know – but start small.

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updated 01/29/2022

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12 thoughts on “Emergency Fund: How to Start One and Grow It”

  1. This will undoubtedly sound stupid, but it does work, and I have been doing it since about 1995. It has saved my rear a few times, over the years. This assumes you use cash for most every-day purchases.

    Every time you come home, take all that heavy, annoying change in coins out of your pockets, dump it into some large container, and try to pretend it does not exist. (NOTE: I now separate out the quarters into their own container, because I have to use them for laundry, but the principle still applies). You probably won’t miss the change. Think about it. Unless you’re a little kid, and if you have a job, those pennies and nickels in your pocket mostly mean you’ll sink faster if you fall into a river, they’re not ‘money’. Kind of a sad social commentary, but true.

    Every year or so, you can get paper coin-wrappers and cash in at a bank (if you are rather OCD) or spend 3% and an hour at a Coinstar machine. Some banks will sort and count coins if you have an account there. Stick the paper cash in your stash-spot of choice, and pretend THAT doesn’t exist either, until absolutely necessary.

    A 1lb coffee can will hold anywhere between $90-$200 in coins. You might be surprised how quickly they fill up. Fairly painless, too.

  2. Good post Rourke. I believe that an emergency fund is directly tied to preparedness and survival. I’m glad that I was able to teach and sponsor Dave Ramsey’s FPU a while back. It was a true blessing.

    I would add that an emergency fund should be 3-6 months of expenses. But you should at least start with $500-1000, pay down your debt first, then stash the 3-6 months…I would say not all at home…at least not yet. 😉

    You will also want small denomination of bills at home. Keep $5, $10 and $20. You might not find people who have change in an emergency scenario.

    It’s not hard to come up with an emergency fund if you are willing to get rid of some of the “fun” like cable, eating out (until you get the $$$), etc… You can also sale stuff around the house that is collecting dust or hasn’t been used in 6 months – 1 year. Have a garage sale or use Craigslist. I have done both and both work well.


  3. I thoroughly agree. I have a friend who wanted support in improving her finances. Amongst other things she wanted to start an emergency fund but never had any money left after paying her bills to grow an account. Over a twelve month period I tried all sorts to get her to make it a priority. Finally one day I got her to open her purse and select a note, any value. I suggested she put it in an envelope and add to it each week, even if it was only 20 cents from her purse. She put the note into an envelope but later that week took it out to buy a coffee on her way home and never did develop her emergency account. The rest of her finances stayed in a mess as well.

    You need to make an emergency account a priority so you have it when you need it. All the excuses in the world won’t be any use when the emergency comes. Supporting my friend for a year had one big pay off for me though. My finances improved by over $50,000 that year. I couldn’t give advice and not do it myself. My emergency account developed to $3000 in cash (well hidden) and it was incredibly useful on more than one occasion, the worst being when someone smashed into our parked car and wrote it off.

  4. I have payed off everything I own. I only have my rent,car insurance and phone bill that I have to pay every month. I own my car and my truck both of which I payed for in cash when I got them. Everything else I own free and clear. I got rid of all my credit cards except for my debt card. I have not had any cards for the past 5 years and don’t miss them at all. My credit is exceptional but I have no need to get anything on credit. I go out and get something small on credit every now and then to keep my credit up but immediately pay it off after 3 months. I am of the belief that my money is safer in my small fireproof safe than at any bank. I keep just enough money in the debt card to pay my small bills off and the rest stays with me, nice and safe and hidden.

  5. I never was good at cutting back to do things such as this. I do, however, firmly believe that selling old and unusued stuff online is the way to go. Certainly you get money for your effort but you free up space (for more stuff) as well; it’s a win-win.

  6. I like the idea of getting a safe. For me sticking money under the matress or in a sock drawer is a lot better than sticking it in the bank. For me it is because I can visually see the stash grow and I like to count it. When it is in the bank the temptation of just clicking a button to move the money over is way to high. For whatever reason it is harder for me to take money from a stash than from the bank – Probably because you actually get to see your money go away. I am gonna have to look into a safe so when the stash of cash gets higher than $100 I can move it from the matress to the safe.

  7. I have an old mason jar on the desk… it gets all the quarters and dimes. There is a small bowl next to the mason jar and it gets all the nickels. Up on the window sill is a coffee cup that gets all the ‘slug’ pennys. I have an old bank sack that gets the ‘coppers’. I take whats left in cash assets each month and turn it into ‘junk silver’ and it goes into bags of ‘cart wheels’, halfs, quarters, dimes. Golly am I a good fella er what. When Mamasan and I come into some larger chucks o cash…. it goes into the safe as cash along with the sacks o cartwheels, halfs, quarters and dimes. This has taken some to develope the disipline to do…. the habit. Now we have it and the ‘money’ pad we have wanted.

  8. Cash is king, so I put 20% of each pay check into my safe and more on occation. I am debt free, payed off the cards and closed them a few years ago, (it hurt my credit initially, but am back in the 700’s). I have also gettign back t micro-managing our family budget. cost of living in Ca, is a roller coaster ride.

  9. Typical penny is 95% copper and 5% zinc. Current spot price for the copper is about 2.3 cents per penny. In other words, each penny is worth 230% of its face value in raw metal.

    Melting point of copper is a tad under 2,000°F. Boron ceramic home crucible with either electric element (kind of expensive unless one is doing this full time) or with a small home forge and a decent set of bellows will get up to 2,400°F. Most metal recycle yards will weigh the slug of metal to ensure the seller is not melting down US coinage (a bit illegal according to the Feds). One solution is to add in about 10% extra raw copper (strip some old wiring and toss it in) to change the unit weight of the melt.

    Net profit is about $3.00 per pound. Assuming it takes 2 hours to melt, cast, and transport 10 pounds of penny and copper wire “scrap”, the hourly wage for this bit of nefarious activity is about $15.00.

    In comparison, the local Wal-Mart pays a little over $7.00 per hour to assist them in selling 4 acres of mostly Chinese stuff.

    Or you could just pick up an old Civil War cannon and use the pennies to repel boarders, in-laws, and revenuers. They won’t fly very straight, but they will make a mess of anything they hit.

    Personally, I just throw the stuff in a jar and let the grandkids use it to help keep the local ice cream truck in business. Occaisionally, we will dig out the quarters for poker night.

    • Hi Harry –

      Actually your composition description of the CURRENT penny is backwards – 97.5% zinc and 2.5% copper. Prior to 1982 the penny was 95% copper.

      Thanks – Rourke

  10. Just dropped the cash for some more “junk silver”.

    Between the collectors market and the silver content, I have a “decent” fund there.


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