Given the unpredictability of life, having the financial cushion of an emergency fund to fall back on can make all the difference should the unexpected strike.

From a sudden medical expense to an unplanned job loss to a major car repair, these events can significantly strain your budget or even put you into debt without the safety net this tool can provide. Perhaps the only predictable thing about life is that it’s unpredictable—you never know when a sudden medical expense, major car repair, or other costly surprise may pop up. Despite this, a survey from the Federal Reserve Board indicates that 37 percent of Americans say they would find it difficult to pay a $400 emergency cost without borrowing money or selling assets.

One way to better prepare for the unexpected is to create an emergency fund. Having a financial cushion to fall back on can make all the difference in the face of such events. Use these four steps to start saving today and help ensure that you are ready for any financial turmoil life throws your way.

1. Define your goals
If you want to build a sizable emergency fund, you have to first establish a well-defined, reasonable goal; being clear in your objective can help you stay motivated and focused. Financial experts typically advise saving three to six months’ worth of living expenses, including your rent or mortgage payment, utility bills, transportation costs, and groceries. For example, if your monthly expenditures come to $3,000, aim to stash away between $9,000 and $18,000. Keep in mind, you may like to increase your ideal savings number as needed for your specific circumstances, such as if you have an older car or existing medical conditions that put you more at risk for unexpected expenses.

2. Assess your savings abilities
After your goal is established, determine how much you have available to save from each paycheck by reviewing your budget. (If you don’t already have one, check out this simple guide to getting started.) After all your typical expenses, how much do you typically have left over at the end of every month? From that amount, you can decide how much you want or are able to allocate toward your emergency savings, which will then help you gauge how long it will take to save up to your goal.

If the timeline seems too long, you can also identify nonessential spending like dining out, subscriptions, or impulse purchases you can cut back on to boost your savings capabilities. By reducing dining out costs by $100 a month, for instance, you can save an extra $1,200 year. It’s all about establishing priorities; give needs above wants top importance. To help with this, there are a plethora of online budgeting apps you can utilize, such as Monarch and Quicken Simplifi.

3. Determine where you want to keep your savings
Your ideal savings vehicle should make your funds readily available as well as offer returns. Two, popular options are high-yield savings accounts and money market accounts, both of which allow your money to grow while still being liquid. The former are essentially similar to a conventional savings accounts but with a much higher interest rate; as of August 2024, they typically pay rates of roughly 5 percent, far higher than the 0.6 percent given by traditional savings accounts, according to Bankrate. Money market accounts, meanwhile, may not only have higher rates but also checks and a debit card.

Still, be sure that both of these types of accounts may have fees or restrictions. These may include transaction or withdrawal limits and a minimum balance to avoid fees or get the best interest rates. Book an appointment with your financial advisor to discuss the intricacies of all your choices to determine the best one for you.

4. Automate your savings
While you may have a firm savings plan in place, it can be easy to accidentally forget to set that money aside or let other priorities get in the way now and again. So after setting up your account, schedule an automatic transfer from your checking to ensure that you don’t miss a month. This approach reduces the urge to spend the money elsewhere and helps you continually increase your fund. With this strategy, you are more likely to keep a consistent savings rate and, thus, meet your financial goals.

It is important to note that establishing an emergency fund is a dynamic process requiring ongoing attention and modification. Review your budget and savings plans to ensure that they reflect changes in your financial situation, such as getting married or buying a house. And don’t hesitate to reach out to a financial adviser, who can provide tailored advice on savings, where to keep your money, and budget changes while helping you draft a comprehensive financial plan including emergency savings and other financial goals.