You may have heard of saving up an “emergency fund” before. So do you need an emergency fund?

If an emergency came up today that would cost you $500 would you be able to cover it without pulling out a credit card? If your answer is no, then you need an emergency fund!

An emergency fund is there to give you peace of mind that you can cover an unexpected expense. This savings account is especially important if you need the money for a true emergency – a car wreck, a sudden illness, or your house floods. In these situations, the last thing you also want to be worrying about is where you’re going to get the money to fix the problem. So how do you get started building your emergency fund?

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How to Get Started

First, decide how much you want to keep saved. Most financial experts recommend having at least $1,000 in the bank. This is what I usually keep in my own emergency fund and it has covered the majority of unexpected and urgent expenses that have come up for me. Some people also recommend saving at least one month’s expenses.

If you have variable income or you are worried about job security, then saving a full 3-6 months’ worth of expenses might be a better way to go. Decide what route you’re most comfortable with.

I just went down to my bank and opened up a savings account connected to my checking when I started my first emergency fund. Back then I was just calling it my savings, but an emergency fund is really what it was. You don’t want to leave your emergency savings sitting in your checking account because that’s way too easy of access. You want the money to be available when you need it, but not so available that you will dip into it when you’re at best buy and find a great deal on a flat-screen TV.

I now have my emergency fund (and my sinking funds) in a CapitalOne 360 savings account that gives me a higher interest rate than my bank would. I have all my savings accounts with CapitalOne connected to a checking account. It has its own debit card that makes it pretty easy to access my money. Having that separate card does keep me from spending that money on anything else.

Read: Can Your Savings Account Make You Money?

But I’m Trying to Pay off Debt!

Me too! Just because you are trying to pay off your debt doesn’t mean you can’t have something major or unexpected happen. What if your car breaks down two weeks before your next paycheck? Cash flowing these types of things is great, but not having an emergency fund for these situations can very easily cause you to end up back in debt when you don’t have the cash on hand. Plus, having emergency savings also gets you in the habit of not spending every penny you make.

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    What Counts as an Emergency?

    Buying a new couch is not an emergency. I’m guessing you probably knew that already, but just in case, I’ll give you a rundown of what is and what isn’t a true emergency. Think of your emergency fund as insurance you’ve given yourself. You don’t use your car insurance when your car is running fine – and you don’t use it to get your windows tinted! You do use it when you get in a wreck.

    Same concept with your emergency fund. When things are going great the money will just sit there doing nothing but looking pretty. But when your dryer tries to catch on fire one evening (it wasn’t a fun experience), you’ll be able to go out and get a new one without too much worry. The rule I use when it comes to my emergency fund is if I’m at all questioning if I should be using it for a certain expense, then I shouldn’t be!

    Start Right Now

    I recommend doing this step as fast as you can. There’s no magic number for how long this step should take you since everyone’s situation will be different, but ASAP is a good mindset. Do some babysitting, sell some stuff, and cut out unnecessary spending for a month or two until you have your emergency fund saved up. Do whatever you need to do to get your $1,000 in the bank as fast as you can. You’ll be really glad when you do.

    Trust me, the second you get that money saved up, a $500 emergency will come up. You’ll be so freakin’ happy you had that money ready!

    I would recommend doing a budget to help you figure out where you can squeeze extra money from. If you’re trying to get your finances organized you’re going to need to start budgeting anyways! Busting your butt for a while will be worth it when you have the security of knowing you have most emergencies covered.

    I believe having an emergency fund is an essential part of budgeting and managing your finances. Here are some additional resources to help you get control of your money:

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    Do you need an emergency fund?