Finding money during an emergency can be very difficult if you fail to plan. Establish emergency savings in both good times and in bad. The chance is very good that you will be called upon to put out a sum of money on the spot and when you least expect it.

It is a very good rule of thumb to sock away three to six months’ living expenses. You can also use this same money when you’re faced with major, unplanned expenses such as a car that breaks down or much needed college funds.

The purpose of this type of savings plan is to put the money away consistently, and then tap into it for true emergencies. The success of this type of long-range savings plan will depend less on the rate of return than on, day-by-day, putting the money away and then leaving it there for a true emergency.

Lock it away and then hide the key.

People who are living on a fixed-income will have the toughest time setting aside money for emergencies. If you can manage to just squeeze out another $10 or $20 each month and sock it away into a money market account, it’s worth doing.

If you decide you need $2,000 in an emergency fund, look at what you can afford to sacrifice each month from your current budget and then look at that sum of money as a bill to pay yourself. Decide on a monthly amount and then put that same amount aside every month and then watch it grow.
Once you have reached your goal of $2,000 you’ll now be in the habit of putting away that extra set amount each month. Keep on doing it.

Financial planners echo the idea of treating your emergency fund as a bill. Put the money away each month, but don’t be tempted by the latest sale. You are not to touch the amount, except for in an emergency.

Putting money aside on your own is hard. Retirement plans are successful because the money comes out of your paycheck before you can get your hands on it and because there are taxes and penalties for early withdrawals.

Stashing money away in an easy access money market account takes discipline. Limit your access to the emergency fund. You can have immediate access to some of the money, but not all of it. The bulk of the fund is to be used, strictly, for emergencies and nothing else.

Once you have saved up about two months of living expenses, move one month of expenses to a one-month CD. When the CD matures, roll the principal and interest into another one-month CD. Your savings will grow well this way.

As you continue making regular payments to the emergency fund money market account, you will soon have another month of living expenses that can be used to invest in a two-or three-month CD. If you are wishing to set aside six months of expenses, continue the process until you can comfortably purchase a six-month CD. Your savings will accumulate quickly this way.

Before you start stashing away your money for an emergency, the first step in building your emergency fund is to figure out just how much money you have to put aside in the first place.

People often don’t know where they’re spending their money. Once you can account for every penny, it’s a lot easier to decide where you can cut back and start to save.

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