9 Steps to Saving a $10,000 Emergency Fund

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If building up an emergency fund was easy, everybody would have one. But it’s hard. In fact, 34 percent of American adults have no emergency savings at all, according to a March 2015 survey by public advocacy organization NeighborWorks America. If that sounds like you, one bad hospital visit, job loss or even a nasty fender bender could send your family into financial straits.

Building an emergency fund might not be easy, but it’s also not impossible — just ask that other 66 percent. What it takes is motivation, persistence and, most of all, a plan. GOBankingRates surveyed a number of financial experts to put together this nine-step plan for the average person to create a $10,000 emergency fund.

Related: 5 Ways to Build an Emergency Fund in 5 Months

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1. Assess Your Spending

You can’t start saving until you know how much money you spend and, more importantly, what you spend it on. You can find this information out easily, and for free (important for that savings goal) through online sites such as Mint.com, which allow you to link your bank account information with Microsoft Excel spreadsheets, or even with pencil and pad, says Aaron Hatch, a certified financial planner and co-founder of Woven Capital.

Related: 17 Biggest Budgeting Mistakes You’re Making

“If you realize you’re spending $200 a month going out to lunch, you might make different decisions,” he said. The point is, it’s easy in the rush of life to think that your morning Starbucks or “occasional” impulse buy are no big deal, but they can really add up. Lattes, lunches and that must-have blouse might be the difference between you and your emergency fund.

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2. Set Reasonable Goals

If you’ve got a mortgage, kids, auto loans or even a reasonably fun social life, saving $10,000 sounds about as feasible as climbing Mount Everest. But here’s the thing: No one climbs Mount Everest overnight. They get to Base Camp, then Camp I, and so on, and weeks later, they’re on the summit. Conquering your $10,000 emergency fund goal should work the same way.

While there’s nothing wrong with setting an ultimate goal of $10,000, you might need more than a year or even two to achieve it. It’s tough to stay motivated and focused for that amount of time, said David Bakke, a regular contributor for personal finance website Money Crashers. “A better strategy would be to make your original goal $1,000 in six months, then go for $2,500 by the end of the year, then $5,000, and so on,” said Bakke. Whatever your numbers are, the point is, make your goals reasonable and achievable.

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3. Make a Budget

It’s time to work your emergency fund into your budget, and unless you’re Paris Hilton, cutting out impulse buys probably isn’t going to be enough to get you to your goals. That’s because most financial experts say you should allocate 10 to 15 percent of all income to your emergency savings, according to Kevin Gallegos, a vice president for personal finance firm Freedom Financial Network. “The key is to pick a percent that you can do consistently and then actually do it, without fail,” he said.

It might help to use a formula and organize things into categories, said Kate Holmes, CFP and founder of Belmore Financial. She suggested working toward a 50/30/20 budget: 50 percent of take-home pay for necessities like housing, food, medical, and transportation; 30 percent for fun stuff like Happy Hour, hobbies, and travel; and 20 percent for debt and savings. If you’re really motivated, you might want to flip the 30 and 20 percent amounts.

Related: How to Create a Budget You’ll Actually Keep

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4. Track Everything and Pay With Cash

Warning: This step might be more tedious than doing dishes. But like doing dishes, it’s essential for a tidy house — and a tight budget. Ilene Davis, a CFP in Cocoa, Fla., who specializes in helping people plan and save, suggested carrying a 3 × 5 notebook and recording everything you buy. “It is that immediate and recorded accountability that can help offset impulse buying,” she said.

Another trick is to use cash whenever possible, said Gallegos. “Research shows that people who do not use debit or credit cards are less likely to throw that extra item into the shopping cart and typically spend 15 to 20 percent less than when using a credit or debit card,” he said.

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5. Pay Yourself Like a Bill

If you’re reading this for advice on how to save, you know that saving is hard. To make it easier — or at least more difficult to avoid — many experts suggest setting up an automatic payment. You can arrange with your employer to direct a portion of your paycheck into a savings account or set up automatic transfers from your checking account to your savings account.

In other words, fund the emergency fund in the same manner as a monthly bill, 401(k) or IRA, said Curtis W. Chambers, a CFP and founder of Chambers Financial Group. “We know this method works with long-term savings,” he said. “I have found it works for building emergency funds as well.” The best part is, after a few months, just like that 401(k) contribution, you might not even miss the money.

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6. Open an Inconvenient-but-High-Yield Savings Account

Let’s face it, there are a lot of Friday nights with the boys or Sunday afternoons with the family when the “emergency” in your emergency fund can take on a whole new meaning. At those times, when you’re starting to justify spending extra money, the last thing you want is easy access to your savings. “Instead, I recommend setting up what I call an ‘inconvenient savings account,’ preferably some distance away, where you have to drive to withdraw the money,” said Eliza Cross, a journalist and author who writes about living happily on less.

You’ll also want to choose a fee-free savings account that helps you build the emergency fund by giving you a return on your money. Assuming you want it liquid — it is an emergency fund, after all — you might do best with an online savings account, like the Ally Bank Online savings account or Capital One 360 online savings account, said Hatch. With annual percentage yields at just under 1 percent interest, you won’t get rich, but they do pay better than most other savings accounts.

“Better yet, the account is separate from your everyday checking account,” he said. “So if you go to the ATM, you won’t trick yourself into thinking you have money to spend.”

Related: 10 Best Savings Accounts of 2015

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7. Put Any Unexpected Money Into Savings

Okay, life has a not-so-funny way of offering up more unexpected expenses — car breakdowns, lost cell phones, teenagers — than unexpected income. But there is the occasional greenback-filled birthday card or bonus from work. When those come along, stuff them into savings, said Kevin Luss, a CFP and founder of insurance and financial services company The Luss Group, Inc.

And if you can’t put it all away, he said to shoot for putting 30 percent away for taxes and 30 percent into your emergency fund. “Once you’ve done that, you can spend the other 30 percent guilt-free,” said Luss. Or on that teenager.

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8. Don’t Pay Off That Credit Card Debt

If you’re the average American, you probably have some credit card debt. If you can do simple math, you know that credit card debt charges you far more than any emergency savings account is likely to generate. But many financial experts say that the strictly logical approach of paying off the credit card debt before saving money might backfire and that you should shoot for doing both simultaneously. “Paying down debt is great, but if you’re not also saving for emergencies, you’ll be kicking yourself if something happens and you don’t have the funds to tie you over,” said Holmes.

Another approach is to pay off the high-interest credit card debt first and then put that minimum payment money toward your savings, said Gallegos. “When you pay off a credit card with a $50 monthly payment, increase your savings by that $50,” he said. It’s like you gave yourself a raise.

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9. Reward Yourself

Following steps one through eight will prove one thing: Spending is easy and saving is hard. That’s why getting a reward every once in a while is important to keep you going, said R. Joseph Ritter Jr., CFP and founder of Zacchaeus Financial Counseling, Inc. If everything is going as planned, you should reward yourself every six months or so, he said.

“This should be a goal worked into your budget,” said Ritter. “The amount should be small but meaningful, so you can enjoy a weekend away, new tech gadget, new purchase for your home, or whatever it might be that you would otherwise put off.”

Whether your new budget allows for a grande latte or a night at a grand hotel, it will help you sustain the momentum to reach that long-term goal of saving up a $10,000 emergency fund. And that will feel very rewarding.

This article originally appeared on GOBankingRates.com: 9 Steps to Saving a $10,000 Emergency Fund

This article by Terence Loose first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.