How much to target
- Starter goal: $1,000 or one month of essential expenses.
- Full goal: 3–6 months of essential expenses (rent/mortgage, utilities, food, insurance, minimum debt payments).
- More if: income is irregular, job is less secure, or you're the sole earner.
Where to keep it
- High-yield savings account (FDIC-insured, easy access).
- Avoid tying it up in CDs or the stock market if you might need it soon.
How to build it
- Set up automatic transfers from checking to savings each pay period.
- Send windfalls (tax refund, bonus) to the fund first.
- Replenish after you use it so it's ready for the next emergency.