Only about half of working Americans have an emergency fund — tap these unexpected sources to start yours

Having an emergency fund protects your investments, retirement savings and other assets when you need money in a pinch. But only 52% of working Americans have one, according to a December 2023 report from Betterment at Work.

That's a 7% decline from 2022 and a 14% drop from 2021. 

"Lacking that type of financial cushion can increase the likelihood of dipping into retirement savings during emergencies, creating a vicious cycle," Mindy Yu, Betterment's director of investing, said in a statement.

Budgets have been stretched thin in 2023, with the cost of food, housing and other essentials all increasing. According to the most recent Bureau of Labor Statistics data, the consumer price index has rose 3.1% between November 2022 and November 2023. 

The average personal saving rate — or how much money American households manage to save after expenses and taxes — has also taken a hit, reaching an all-time low of 3.4% in September 2023, according to data from the U.S. Bureau of Economic Analysis.

That's a titanic plunge from the all-time high of 32%, reached at the start of the pandemic in April 2020, and still far below the 8.9% average of the past several decades. In October, the most recent month for which data is available, the savings rate only crept up to 3.8%.

More than 80% of workers without an emergency fund don't think they have the resources to build one, according to Yu.

But even with inflation eating away at discretionary income, establishing a financial safety net isn't impossible. Here are some creative ways to build your emergency fund.  

• Earmark your tax refund for your emergency fund
• Save up credit card rewards
• Take advantage of bank account welcome bonuses 
• Bottom line

If you're expecting a tax refund when you file your 2023 taxes, commit to saving that money when it arrives in 2024.  

While many people think of April as tax season, most people can file much sooner — and get their refund earlier, too. For example, the IRS started accepting 2022 tax returns on January 23, 2023, and began issuing refunds just a few weeks later. The average tax refund last season was $2,753, a healthy start to any emergency fund.

Even before employers send out tax documents, you can select a tax professional or tax-filing software.  One of our favorite online programs is Intuit's TurboTax, which has a variety of service levels, audit support and step-by-step guidance throughout the filing process. If you feel stuck, there are plans with on-demand help and final reviews by tax experts.  

For those who want to file for free, CNBC Select recommends Cash App Taxes (formerly Credit Karma Tax). While it's only available in 40 states and Washington, D.C., it's completely free and offers a maximum refund guarantee and audit defense protection.  

Yes, a rewards credit card can help you build your rainy day fund. Cash-back credit cards reward you for the spending you're already doing, from shopping for groceries to filling your gas tank. Some of the best flat-rate cash-back cards earn 2% cash back on all purchases.

There are ones with no annual fee — like the Citi Double Cash® Card, which offers unlimited 1% back when you make a purchase and an additional 1% back when you pay your bill. Best of all, it doesn't require you to keep track of rotating monthly categories.  

The Chase Freedom Unlimited® card is another great option. This card has several benefits beyond its cash-back rewards and $0 annual fee, including a welcome bonus of an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) and a 0% APR intro period on purchases for the first 15 months (then a 20.49% - 29.24% variable APR).

Cash-back rewards can be redeemed in several ways: As a paper check or direct deposit into your bank account, a statement credit towards your account balance or as a gift card. If your reward comes as a gift card, it might be possible to sell it for cash. If not, try to put it toward household essentials and divert the money you would have used toward your fund.

If you're on the hunt for a new checking or savings account, choose one with a welcome bonus to kickstart your emergency fund.  

Savings account welcome bonuses vary based on how much you deposit, but typically range from $60 to $400. There are also checking account bonuses, which usually start at $100. 

Depending on any direct deposits you set up within a 25-day bonus period, a SoFi Checking and Savings account comes with a cash bonus of up to $300.  

While experts recommend saving three to six months' worth of expenses for your emergency fund, even a few hundred dollars is a good start.

An emergency fund should be a fundamental part of your financial plan. With inflation taxing out budgets, you may need to get creative and tap unexpected sources like tax refunds, credit card rewards and welcome bonuses to build yours.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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