Creative Ways to Set Up an Emergency Fund

You know you should have an emergency fund. You've heard the advice time and time again: you should have three to six months' worth of expenses set aside in case of emergency. How can you begin an emergency fund with no money?

Gather your change that is lying around collecting dust. Deposit the change into the bank. Many banks and credit unions will gladly start an account for you with as little as twenty bucks, sometimes less.

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Other options include getting a paper route or a part-time job delivering pizzas. You could start an in-home daycare or dog-walking service.

Finally, take a hard look at your budget and decide what you can change. Do you eat lunch out every day? Perhaps you could cut back and take your lunch from home a few days a week. Maybe you could turn down the thermostat when you are not home. Both ideas can save you hundreds of dollars a year. Cut out your daily coffee stop and make coffee at home.

Once you've taken a hard look at your budget and decided what amount you can contribute to an emergency fund on a regular basis, stick to your plan. Set up an automatic transfer so that every time you get paid, your predetermined amount gets transferred from your regular checking account into your savings account. Whether ten bucks a month or two hundred dollars a month, you can watch your emergency fund quickly accumulate the cash you'll need for an emergency situation.

As you are setting up an emergency fund, an important factor to consider is what specific situations you may use to tap into your emergency fund. Will you use your stowed- away cash for unexpected car repairs? In the event that you lose your regular job? In case of unexpected home repairs? Write a list of what the emergency fund will be used for and stick to it. A new sweater is not an emergency, nor is a last-minute vacation.