Last Updated Apr 15, 2009 3:13 PM EDT
How to set up an emergency fund
An emergency fund is an easily accessible stash of money you can tap if you lose your job, get sick, or run into immediate, unexpected expenses — like a blown gasket — so you don't blow a gasket. Maintaining a cash cushion will help you ride out rough times without piling up debt and will protect your long-term financial health. You'll want to keep your emergency fund in a safe account where the value won't fluctuate with the vagaries of the stock or bond market, such as a savings account or money market fund. This way, the cash will be there when you need it.
Most financial advisers recommend creating an emergency fund worth at least the equivalent of three to six months of expenses. You probably can't set aside that much money overnight. Instead, seed your emergency fund a little at a time, perhaps by arranging for small automatic transfers from your checking to savings accounts.
The links below offer strategies for freeing up cash for your emergency fund plus advice on where to safely and conveniently keep the money.
An easy guide to important considerations before you create an emergency savings fund. Plus: which source of money you should tap first in an emergency.
The hardest thing about setting up an emergency savings fund is finding the cash for it. Here are some clever ideas that will help you set aside the money you need.
Think you can't afford to set aside money for an emergency savings fund? Think again. Here's how to do it and why you can't afford not to.
These tips will show you how to earn the most possible on the money in your emergency savings fund. You'll learn why buying a series of CDs or some Treasury bills might be worth considering.
Bankrate.com will find you the highest yields available on checking and savings accounts so you can earn the most possible in your emergency savings fund. You can search by the type of account and the amount of money you'll keep in the account.