An emergency fund might just help you sleep better at night

We all encounter unexpected expenses that strain our budgets, whether it’s a car repair, trip to urgent care or sudden loss of a job. As with most things, a little planning goes a long way.

That’s why it’s a good move to have an emergency fund that you can depend on. Knowing you can absorb a hit reduces financial stress, according to a survey by the Federal Reserve Board. That same survey found that 40 percent of Americans could not cover a $400 unexpected expense from their savings.

Here’s how to get started.

The fund

The conventional wisdom is that an emergency fund should amount to three to six months of expenses. For a household with $3,000 in monthly expenses, that’s $9,000 to $18,000. A worthy goal, and awesome if you can do it. But, the best advice is to do what you can. Start small, keep at it, increase the amount. Just $25 a week will net you $1,300 in year. Some emergency money goes a long way when you need it.

The account

You want to be able to access the money without delay, so a savings account is best because it’s not tied up in investments or subject to early withdrawal fees. And keep it separate from your other savings or checking accounts so you will be less tempted to dip into it for everyday expenses or special occasions.

How to save

The best strategy is to make saving automatic so you don’t have to think about it. If you have direct deposit, designate a portion of your paycheck to your emergency fund account. Make it whatever you can afford: whether that’s $10 a month or 10% of your paycheck.

If you get a refund at tax time, consider depositing all or a portion of it into your emergency fund. That applies to any windfall you’re fortunate enough to receive.

Consider using OCCU Change Jar, which rounds up your debit card purchases to the nearest dollar and deposits the difference into a savings account.