Emergency...

Your goal should be to pay off your credit card bills in full at the end of each month and set aside money toward your emergency savings.

~Suze Orman

Save for a rainy day.  Pay yourself first.  Set aside 10% of your income.  Feed the pig(gy bank). 

We all say it in a different way but the bottom line is that having an emergency fund is an important financial tool.  An emergency fund keeps us from pulling out the credit cards when the car breaks down, the roof leaks, an accident lands you in the emergency room or a job loss occurs. 

Knowing you need an emergency fund (EF) is one thing, creating one is a little harder.  The financial experts have different ideas as to how much you need in your EF but generally 3-6 months of living expenses is a good start.  If you are in a stable job, three months is probably good.  If you are self-employed or in a less stable job, aiming for six months (or more) is a smart idea.

If you are in debt (credit card, car payments, student loans) it might be hard to wrap your head around paying down your debt AND building an EF.  I love Dave Ramsey's idea of a $1000 baby emergency fund.  The idea is that you will have $1000 set aside to take care of small emergencies in cash and not use a credit card. Take every extra penny you can find to put towards your $1000 EF.  

Some ideas for starting your emergency fund:

• Use your tax refund.  Most of us will be receiving this soon and this may be all you need to make it to that $1000 mark.
• Skip the morning coffee.  $5 a day is $25 during the workweek. 
• Brown Bag it. $10 a day for a lunch out is pretty standard.  Imagine have $50 at the end of the week for your EF.  
• Pay minimums on your credit cards.  If you've been paying $300 on a credit card that has a minimum monthly payment of $50 and just pay the $50 minimum one month you'll have $250 to put in your EF. Once you've reached your $1000 goal you can go back to paying the extra on the credit card.

See how fast it grows?  Most of us have some extra money to put in the bank if we really look around. 

And when the emergency hits (and it will) you'll have a feeling of satisfaction knowing that you have the cash to cover it.