Sometimes you can’t budget for the things that happen in life.

Accidents, illness, injury, fires, hurricanes, earthquakes, losing a job, home repairs, car repairs — you can’t always see them coming. That’s just the way it is.

Having an emergency fund can help to soften the blow.

What’s an Emergency Fund?

An emergency fund is only for an emergency. It’s not money that you’re saving for a house, it’s not a fund to dip into to buy a new iPad. It’s money that should only be used only in an emergency, when the banana really hits the fan.

No one wants to deal with an emergency situation. But, knowing you can sure helps.

Why?

Many people have have great intentions of saving money and never do so. In fact, some of our great Gaucho readers and many others may have made New Year’s Resolutions just a month ago to save more money. How many actually stick to task?

It’s not easy. Even with our Great Recession of the Naughts & ’10, which has taught or forced many people to cut back, we remain a spend-happy society. We’re all trained to spend. To look for deals, yes, but then spend.

But what are you really saving? If something bad happens, are you prepared for it?

The answer to this question for many people used to be to have a high balance credit card that they could use to cover expenses in a tight bind. But this is no solution. During some very lean, difficult times in grad school, I had to turn to credit cards myself. As I found out, and as so many others have as well, credit cards provide absolutely no good way to save money. If you find yourself in need of money, your financial life will be much better off for many reasons if you have a stash of cash to turn to instead of credit cards. With today’s higher interest rates and tough credit policies, this is especially true.

If you have the funds to attend to an emergency, you’ll be in a much stronger position to deal with it and move on with life. Having no money on hand can cause the hardship to echo out over the course of time — which then affects relationships, lifestyle, and credit for years to come.

While tough times make it harder to save, they also make it that much more important. If you’re totally broke, an emergency fund may not even be a remote possibility, but keep it in mind for when things get better. If you’re deep in debt, you might be better off paying down your debt — but keep something on hand, just in case. That way, if your kid needs to go to the doctor, you have the money on hand to take them.

How Much to Save

You’ll hear experts claim that you should have anywhere from 2 – 12 months of living expenses saved for an emergency, as the most likely need for such funds will be due to a job loss or illness that creates a sudden loss of income.

This is really nice in theory, but is it realistic? Especially if you or your spouse are unemployed at the moment? Probably not. The amount that’s best for you will also depend on your debt and number of dependents. So the right answer becomes: save what you can. Hopefully, if you have a tire blow out, you’ll at least have enough to replace it without having to resort to credit cards.

How To Save Money for an Emergency

Saving up an emergency fund shouldn’t be a huge chore. Here’s some ways to make it a reality.

1. Decide How Much

Go ahead, pick a number any number. $500? $1,000? $5,000? Or, calculate your monthly expenses and multiply it by the number of months you’d like your emergency fund to be capable of covering. Either way, the idea is that you need to set a goal. That’s the first step. Then build on it.

2. Decide Where

Open an account or specify an account that will be for emergencies only. This could be a checking account, a savings account, or whatever. Just put the money someplace and leave it there until needed. Some people like to open an account with a bank other than their main one, transfer funds online, and forget about it. I know other people that like to put the money into stocks, or even buying gold, so they can’t access the money as easily. This is a good idea, but if something happens, you might want to be able to access that cash a bit faster.

As your emergency fund grows, you might want to consider savings options that yield a higher return on interest.

3. Contribute Consistently

Whether you put $500 a week or $10 a month into your emergency fund, you have to do it consistently. Small amounts add up over time. Set up automatic deposits and transfers to help the cause.

4. Change You Can Believe In

If you have a coin jar with where you collect pocket change, instead of using it to fund a trip to Vegas to relive The Hangover with your buddies or girlfriends, put it into your emergency fund.

5. Replace a Habit

Look at your spending habits to see where you can cut back. Insert your own coffee-money cliche here, please. Skip going out and entertain friends at home. Look for 2-for-1 and Dine About Town-type deals to save on eating out, or even better, simply don’t eat out. Put that money into your emergency fund.

6. Define ‘Emergency’

Most people don’t save enough because their lives are full of ‘emergencies’. Define an emergency as a matter that affects life or death, your ability to generate income (like repairing a car needed for work), or items needed to retain a healthy standard of living. It’s for needs, not wants. For buying a new water heater when you need one, not remodeling the kitchen because you want to.

7. Get Creative

Have yard sales. Use coupons. Avoid expensive brand names. Sell the old air hockey table you don’t use. Sell old clothes at a second-hand store. Find ways to find money to put into your emergency fund.

It’s Not About Glamor

Saving an emergency fund may not be the most glamorous thing in the world, but if it means the difference between people able to buy a plane ticket to see an ill relative, or knowing how you can pay for your family’s next meal, rent, or mortgage payment — it’s well worth the effort.