Your Emergency Fund

Start an emergency savings account today to prepare for a rainy – or snowy or windy – day
Having an emergency fund is important no matter where you live. If a catastrophe hits your area, you will likely find yourself taking time off work to handle the aftermath and spending money to rebuild whatever the catastrophe ruined.

Don't go into debt or dip into your retirement savings after an emergency. Start your emergency fund savings now so that you're prepared. Experts suggest you have six months' salary in the bank to feel secure. So if you take home $2,000 a month from your job, work toward a $12,000 emergency fund, even if you do it $50 at a time.

Keep your emergency savings in stable, lower-risk accounts where you can access your money easily, without penalties. Start with a regular savings account at a bank that is FDIC insured. Once your emergency fund starts to grow, consider moving some of it to a certificate of deposit or money market savings account, which typically offer better interest rates.

Developing an emergency fund takes time, and you have to set realistic goals. Here are some tips to get you started:

Decide on an amount you can live with, perhaps 5% of your paycheck
Save through automatic payroll deduction, so you won’t have a chance to spend the money
Think of it as you think of a bill − something you have to pay
Skip one big expense this year and use that money to launch your emergency fund
Put your tax refund or company bonus into the emergency fund
Your emergency fund savings account may not be as exciting as a trip-to-Japan fund, but if something happens to your home during a catastrophe, you will be glad you chose the path that protects your family.