Experts agree that we should all have money put aside in the event of an emergency. Smart people can differ on how much is enough; some say 3-6 months of living expenses, others focus on a dollar amount. You are in the best position to understand your needs, risk-tolerance and any other special considerations. Our Emergency Fund calculator can help you determine how much you should save based on your circumstances.
If you don't have an Emergency Fund - it's easy to quickly become overwhelmed. Start small! By saving a small amount every month, you will quickly develop a savings habit. Setting up direct deposit (where you can automatically deposit money from your paycheck into a savings account) or creating an automatic transfer from a checking to a savings account every payday ensures that you are building your Emergency Fund automatically.
Start your Emergency Fund with a savings account. They are simple and easy to use. As your account grows, you may want to consider a Certificate of Deposit (CD) or a Money Market account. These accounts have higher interest rates and can make your Emergency Fund grow more quickly. However, it is important that you keep your fund accessible; don't use these funds to invest in a mutual fund or stock as markets can fluctuate and you could lose money in the short term.