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Who wouldn’t love to have money just sitting around, waiting to be used in case of an emergency? Who wouldn’t feel better about having money when you need it, instead of going without or using a credit card during the lean times? Most everyone will agree that an emergency fund is a good idea, but knowing this is only the first step though. The next step is to decide how much of a fund you initially want to have. I’d recommend whatever seems like a relatively easy goal to you: maybe somewhere between $500 and $5000. The most important step is to actually build your emergency fund. Depending on your situation, you can go about this in different ways.

One of the easiest ways is to set up an automatic transfer each pay period to an account that you’ve designated as your emergency fund. Choose an amount that you know you can live without, because you’ll probably want to tell yourself that once it’s in there, it stays in there unless a pre-defined emergency comes up AND you can’t find the money elsewhere. For this reason, when I finally got my emergency fund going I made the amount that was sent to it on a regular basis somewhat low. That was my minimum commitment. Of course I also added additional amounts as I got extra money or realized that I wanted to build the fund up faster, but I made sure to stick to my original commitment throughout. Doing this helps maintain traction.

Another way to start an emergency fund, especially if you don’t get paid regularly or in set amounts, is to start a change jar or emergency envelope. This works best if you have cash on a regular basis, because at the end of each day you can simply dump your leftover cash into the jar or envelope. Once it hits a certain amount, take it to the bank. You can do something similar with a program like BofA’s Keep the Change. You’ll be surprised at how quickly even a little bit adds when you’re committed to not spending it.

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