Having some extra money set aside for those unexpected expenses is the only way to get out of debt, stay out of debt and above all, build wealth. Too many people today don’t even have a savings account let alone an emergency fund account. Saving should be one of the first things you do with your money not the last thing.

Your emergency fund is the safety net in the event you get sick, loose your job, have unexpected car repairs, medical expense, etc. Imagine the peace of mind it would give you, just knowing you have extra cash available if some unexpected financial burden comes up. Not only will you have the means to cover it, but it will also keep you from going into debt over it.

“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

General guidelines you’ll hear from financial planners as to how much you should sock away into your emergency fund ranges from 3 to 12 months of your monthly living expenses. I find 6 to 9 months of your monthly living expenses to be a happy medium, but ultimately the decision is yours based on your level of security and your life circumstances. For example, the smaller your family responsibilities are the 3 to 6 month range may work fine for you and visa-versa.

Once you decide how much you want to put away into your emergency fund then you have to make sure you created a monthly spending budget in order to cover your bills and necessary expenses. This monthly budget will be your base for setting and attaining your emergency fund goal. This will be the foundation you will be building your wealth on.

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