What would you do if a financial emergency struck? Where would you get the money to live? How much money should you have?

Here's a three-step plan that will help you get started.
  1. Determine How Much You Need
    Decide how much you want in your emergency fund. Many experts advise setting aside three to six months of living expenses in reserve. Even if you have far less, a small reserve can still increase your peace of mind and your sense of financial flexibility.
  2. Figure Out How to Consistently Save
    Decide how you will go about saving this money. A payroll deduction is a great way to save for emergencies. Even $25 a paycheck adds up.
  3. Find a Safe Place to Put Your Savings
    Figure out where you will put these emergency savings. You want an account that is:
    • Readily available;
    • Safe, with the return of your money guaranteed;
    • Income-producing.