Emergency FundHow to Create an Emergency Fund for Those Hard Times...

Crises... You know they're going to happen. They always do. You are sailing along fine in your little world and them BOOM! All of a sudden, something happens to pull the rug out from under you and you are left sitting there, basically helpless,  not knowing what to do or how you will get through the crisis that has just occurred. These are the times that that good ole 'Emergency Fund' will come in useful.

Some people may question the necessity of having an emergency fund. After all, is it really necessary? How do you go about it? Does it need to be a huge amount? Here are some ideas and suggestions that should help answer these questions.

Should I Really Have an Emergency Fund?

Generally speaking, yes, you really should have an emergency fund. What would you do if something unforseen happened, such as a tornado or fire (god forbid) and your home and belongings are wiped out? There is no set form it should take, this can vary from person/family to person/family, but it really is a very good idea to start an emergency fund. Having such a fund can help you avoid high-interest debt, and it will help you reduce the stress that can occur in emergency situations. After all, life is full of changes - many of them sudden and not good - and having that "cushion" that you can fall back on, can help you feel ready and calm.

First, you need to determine your expenses. Look at three to six months' worth of living costs and count on saving that much in a fund. This can help you keep your standard of living for a time if you lose your job, or it can cover a large expense such as vehicle repair. Then determine how long it will take you to save that much and how much you have to take out of your paycheck each month to reach that goal.

Change Your Mentality

Once you've determined how much you need to save and how long it will take to save it, then it's time to put your plan to work. First, however... you may need to change your mentality. You will need to start to put payments into the emergency fund before you pay for anything else. If you can do it by automatic deduction, go for it - see if you can have a portion of your paycheck taken out and put into a savings account. Otherwise, make it a habit to put a small amount of money in your savings first and foremost. Take care of your other expenses once you have done this.

So, What Do You Do If I Have Low Income?

Even if you have low income, you can set aside "something". Even if it's just a dollar or so a week. Try saving a percentage of your income, such as 5 or 10 percent, it doesn't matter... It may take you longer, but it will accumulate.

Does My Emergency Fund Have to Be Huge?

In short, no. An emergency fund does not have to be massive - but it certainly should cover unexpected expenses. To determine the size of your fund, consider what sorts of emergencies you'd want covered by the fund. Remember that buying insurance may be a more cost-effective way to guard against emergencies, too - evaluate the scope, likelihood, and potential cost of possible emergencies and this should give you a clearer picture of how large your fund needs to be. However, insurance takes time and you will have to live by the whims of the insurance company's time schedule. This option may not be the best for some people.Therefore, setting aside money on your own is really the easiest solution.  It's time to start your emergency fund.

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Michelle Hoffmannemergency fund is the owner, editor and publisher of The 24KaratMarketer Ezine – http://free24karatmarketer.com, an online publication that is dedicated to helping marketers, new and experienced, succeed in their online businesses.   She is also a mother, writer, photographer, web designer and student of nature.  Yes, she does it all!

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