An emergency fund is the backbone of a healthy personal financial plan. Having one will make sure you’re financially prepared when life throws an unexpected curveball in your direction and helps to alleviate stress. If you’re unsure where to start, we’ve answered five common questions about emergency funds.

What is an emergency fund? It’s money you have set aside, so you’ll have peace of mind when an emergency upends your world. An emergency fund helps cover life’s un-expectancies, such as a car accident, leaky roof, or a medical emergency. It can also be a safety net if your household income changes unexpectedly due to a job loss. It isn’t for planned purchases—like a down payment for a new car—or impulse shopping.

How much do I need to save? There isn’t a set amount. It’s custom and based on your personal situation. A good rule of thumb would be three to six months of your household living expenses. A three-month emergency fund should be sufficient for households with two incomes or stable jobs with low layoff ratios. If you are self-employed, or your income could fluctuate due to commissions or seasonal work, your situation would be considered less stable, and a six-month fund would likely better fit your needs.

Where do I start? Start small—$1,000-$1,500 is a good goal. A smaller goal is easier to reach, and you’ll feel accomplished once you’ve hit this milestone. Plus, if you’re still trying to pay off debt, you’ll be able to reach both goals without feeling financially strained. To help make your plan more manageable, set up automatic, reoccurring transfers into your emergency fund account. Or, use our Shortcut to Savings program to round up every Debit Card purchase and automatically transfer the difference to your designated account.

Where should I keep my funds? Your money should be liquid, meaning you can access your funds quickly. You have several options to choose from at Yolo Federal, including a Secondary Savings, Checking, or Money Market Account. Most importantly, you should consider if you will need access to the funds with a Debit Card—just don’t let yourself be tempted to dip in.

How do I know if it’s an emergency? Not all sudden expenses are considered an emergency, but how can you tell the difference? Ask yourself: is it unexpected? Is it necessary? Is it urgent? The more ‘yes’ answers you have to these questions, the more likely it is an emergency.

Having a fully stocked emergency fund doesn’t happen overnight. It takes focus and commitment to achieve your goal. Setting smaller goals and using the SMART goals technique will help you steadily grow your emergency fund goal. If you’re ready to get started, schedule an appointment with a Yolo Federal Representative to open your emergency fund account.