Saving out for a rainy day, is a well thought out saying. Not everyday is a Sunday! Today, you might be in the pink of wealth but you never know when you will lose your job or run out of money. Therefore, it is absolutely essential to maintain an emergency fund that must cover at least 6 months of your expenditure.



Importantly, you should know that for creating a fund ?how much money you need?. Maintain proper records of your expenses as emergencies can be expensive ? accidents, illness, disability, catastrophe, disaster. None of these emergencies give you a warning sign before presenting itself.

Planning for an emergency fund requires you to employ the same strategy like any other financial goal. Housing, transportation and food will be your main expenses apart from miscellaneous items. So your total expenses multiplied by 3 should be the amount you should aim at to start with.

Find every way to cut down on expenditure and add to your emergency fund. Plan as to how long you will take to build that fund. Set aside a fixed amount in the beginning of every month for the fund. Assume that this money does not even belong to you. Now you have to live the month with the remaining that you have. Next you spend, think if you REALLY need to spend money on that. Cut the hours you spend on your cell phone, save your bonus and put that in the fund, if you're used to eating out four times a week, make it twice and modest amounts each time. The money that you save up from here is something you could add onto the fund at the end of the month. But this does not excuse you from the money you will set aside in the beginning of every month. Treat this as a recurring expenditure.

Every time you get the slightest of money, put that straight into the fund. Cook your own meal. Put you ?cash back? on credit card into the fund. Same applies to your income tax refund.

Your emergency fund is like an insurance policy. So, guard it safely. You cannot dip into this for incidental expenses. It is so difficult to replace money once you spent it. Spend it only incase of an absolute emergency. Here's hoping that emergency happens. Incase it does, you will be more than happy you saved the amount because you wont have to go on your knees for money in those circumstances. Start saving now. Discipline and focus is all you need.