51% of Middle-Income Americans Have Tapped Their Emergency Funds Over the Past 12 Months. Here’s How They Can Replenish

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There are steps you can take to put back the money you took out. 

Rampant inflation wreaked havoc on consumers in 2022, and many middle-income households had to make changes because of it. For some, that meant taking on debt. For others, it meant cutting back on spending, even to the point of skimping on essential expenses.

Not surprisingly, 51% of middle-income households had to tap their emergency funds last year, according to a recent survey by Primerica. And if you landed in a similar situation, you may be eager to replenish your savings account balance as quickly as possible.

See, we don’t know if a recession will hit the U.S. economy in 2023. But in the aforementioned survey, most respondents said they think conditions will worsen in 2023. And if the economy tanks, you’ll want a stronger emergency fund, not a partially depleted one. With that in mind, here are some steps you can take to replenish your emergency fund after a recent withdrawal.

1. Rework your budget

You may have money allocated to different expenses, from your rent to your car payments to your leisure spending. Clearly, if you’re locked into a lease, there’s not much you can do to lower your rent costs. And if you need a car to function and you own a modest one, then you may be stuck with your $340 monthly payment.

But there may be costs in your budget you can cut temporarily to replenish your emergency fund. That could mean canceling some subscriptions for a period of time until your savings balance grows nicely.

2. Get a side hustle

Despite recession warnings, the gig economy is very much alive and well today. And that gives you a solid opportunity to take on a side hustle and use your earnings to replenish your savings. If you earn enough, you might even land in a position where you have a higher emergency fund balance than you did before your last withdrawal.

And who knows? If you find that your side gig is both manageable and enjoyable, you might decide to keep it even once your savings balance is looking stronger. That could mean more financial wiggle room on an ongoing basis.

3. Bank your next windfall

Believe it or not, the 2023 tax-filing season has already kicked off, and that means that chances are, there’s some sort of refund coming your way from the IRS. Rather than make plans to spend that money, put all of it in the bank to make your emergency fund whole again.

That said, a tax refund isn’t guaranteed. But there may be other small windfalls that will land in your lap in the coming months, like a cash gift for your birthday or a bonus at work. Putting that money into savings could help bring your emergency fund balance back up to where you want it to be.

If you took money from your emergency fund to deal with an unexpected expense or inflation, don’t beat yourself up. But also, do what you can to replenish your savings so you have the solid safety net you deserve.

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