Prepare an Emergency Fund

We should all be prepared for an emergency.  And a financial emergency is no different.  So, how do you prepare for a financial emergency?  Below is a list of steps you should take to create an emergency fund. 

What amount should be in an emergency fund? Save at least three - six months worth of expenses.  Example: If your monthly expenses are $1,000 you should save $3,000 - $6,000 in a separate savings account, this is your emergency fund.

Here's How To Create an Emergency Fund

• Find sources of extra cash -- passive income is a great way to create extra cash.
• Use a High-yield savings account - High-yield accounts can be Money Market accounts, or CD's.  A regular savings account generally offers a lower interest rate.  You want the big bang for your buck, especially since the money will be sitting and waiting for a rainy day.
• Use a automatic deposit - you can have your bank deducted any amount of money from your paycheck or another bank account.
• You will have to by discipline.  Don't dip into your emergency fund.
• If you have a 401K - temporary suspend your contribution and use that money to create your emergency fund.  Once you have created the emergency fund resume your 401K contributions.
• If you own and home or a car - raise you deductible.  Use that extra cash to create your emergency.  If you like, increase your emergency fund amount to included the new higher deductible.
• Sell unused items - Jump on ebay and sell the stuff you don't use anymore.
• Take on a part time job.