by Brian Dooley

Created on: March 22, 2007   Last Updated: December 27, 2010

Determining how much you should set aside for an emergency begins by asking two deeper questions, below the surface question of simply, "How Much?"

While most financial experts advise that we should have 3 to 6 months stashed away for a rainy day, the bitter reality is that most middle-class earners often have a tough time saving up 3 to 6 weeks of emergency money, let alone months.

Question one: How much can you NOT touch

So before we look at "How Much" do you need, let's first look at how much you can realistically set aside without touching. Because the challenge facing many families today, is the constant give and take from themselves by dipping into their own emergency funds. Robbing "Peter to pay Paul" will always get you into more trouble. The easiest way to stop this vicious spin cycle is to set up TWO emergency accounts. One that will become your "just in case fund. The other, an "OH-NO, I'M-OUT-OF-GAS-UNTIL-PAYDAY" fund. Simply put, creating a pre-emptive, pre-emergency fund to keep from losing your gains, before you've even had a chance to really get started.

A disclaimer - If you live paycheck-to-paycheck and setting aside even $20 bucks a week causes some strain, then understand in advance that while an emergency fund is wise and worth the patience, it's going to take some time to grow.

Start with spare change Even in low-income families the national average for non-housing expenses is roughly $400 a month, which includes groceries, transportation and miscellaneous household items. While it may not seem like a lot, there's still room to start saving, albeit a little, each week. When you do any shopping, carry and spend only bills. When you get home, empty your pockets, split the loose change in half and "Bank" it in two empty cans or jars, one for your "Pre" emergency fund the other half in your "Real" emergency fund. Then store both "Banks" in a place out-of sight, say the pantry or under the bed. The old adage "out of sight, out of mind" still has merit today. In short of a few weeks, you will have saved more than you thought!

If you're fortunate enough to be above low-income level, but still struggle to make ends meet, you can use the aforementioned tip, and add one more piece to your saving regiment. Open a designated "Emergency Fund" in the form of an on-line savings account (INGDirect, Emigrant Direct and Citi Financial as examples, all offer the features you'll be looking for) and set up a weekly auto draft from your checking of $5, $10

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