How To Build An Emergency Fund: With or Without Student Loans


Anybody would be wise to start saving for emergencies. Knowing that you have money saved to handle any unforeseen bills gives you a sense of security and contentment. But if you’re working off debt, how can you save money for emergencies? It may seem impossible to save anything at all if you are still making student loan payments.

Fortunately, there are several strategies that will enable you to save more than half of the monthly payment due on your loan balance. With or without an emergency fund in place, we’ll look at the best ways to save money while paying down student debt in this post.

Why it’s so hard to save before paying off debt

The hardest debt to repay is student loan debt. The ideal strategy to pay off student loans is to swiftly pay off as much of them as you can while also making extra payments because the interest rate is so much higher than practically any other sort of debt.


You’ll be able to reduce your payments by half in a few years, and then by a third when you pay off your school loans. But while you’re at school, there are other costs besides loans.

When you’re not in school, it seems like you’re constantly renting new clothes and purchasing new pairs of shoes! Fortunately, this is one situation in which having student debt is beneficial.

You can lower the amount you pay for things that you must purchase with your salary since student loans are deducted from it each month.

How to save while paying off debt

You might need to make concessions if you have a significant loan debt. Making a budget is the first step in achieving this, and you should think about using a calculator to make it easier to understand just how much money you’re spending each month.

Take a look at your spending and make some modifications if you find that you’re spending more than you’re bringing in. Groceries, entertainment, and the occasional impulsive purchase are some typical areas to think about reducing back on.

However, it’s crucial to ascertain the root cause of your expenditures before you make any improvements. You can use a budget calculator to determine where your money is going and how much it would cost to get it under control.

How to save even more

It’s a good idea to save even more money even if you already have an emergency fund. Here are two approaches to achieve it: Increase the amount you pay each month toward your student loan debt. It may be tempting to believe that you can pay off your monthly obligation while paying off other obligations, such as credit card debt.

Unfortunately, that frequently leads to catastrophe. Your debts will inevitably increase, and your credit score will suffer. In the end, you’ll have a pile of debt that you’ll never be able to pay off.

Make a bigger payment on your student loans rather than using money from your emergency fund to do so. In addition to making it simpler for you to pay your monthly bills, doing so will raise your credit rating.

Why it’s so important to have an emergency fund

Having an emergency fund gives you the flexibility to draw on it anytime you face a financial emergency, which is the basic reason behind having one. But why should you take this action? It could seem counterintuitive at first.

You wouldn’t be able to save for major expenditures if you didn’t first establish an emergency reserve, after all. That’s not exactly the case, though. Your ability to invest in the stock market each month increases as a result of using the emergency fund to pay for all of your costs.

As a result, if you have additional cash on hand each month, you’ll have more money to invest and build your wealth over time. Second, avoiding debt collectors is possible with the help of an emergency fund.

How to build an emergency fund

While settling debt, there are numerous strategies to save money. Your debt strategy and goals will determine everything. Pay off your debt after you’ve saved up some additional cash. Simply deciding to be debt-free in 5–10 years could be your aim.

Given that you have years to work and accumulate savings, this might be a reasonable amount of time. Simply deciding to be debt-free in 5–10 years could be your aim. Given that you have years to work and accumulate savings, this might be a reasonable amount of time.

Get rid of all of your debt after working toward becoming debt-free. We have set this as our objective. Don’t get too focused on the objective itself because paying off your debt quickly isn’t possible. Not right now, but eventually, we want to be debt-free.


Do you have any student loan debt? If so, you are not alone. According to a 2017 Pew Research Center survey, a staggering 42% of Americans are in debt for student loans. But don’t be alarmed by that figure.

There are methods for paying off student debt without using up all of your savings. Saving money right away is actually the first step towards repaying your student loans.

Think about using a debt snowball to lower your monthly payments until you’re spending less than you did in the previous five years to pay off your outstanding balance, like our Student Loan Debt Snowball Calculator. Building an emergency fund is an affordable and sensible strategy to regain financial security once you are entirely debt-free.


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