Budgets help many families stay out of financial trouble, and they’re useful tools for everyone regardless of their income or bank account balance. Budgeting allows consumers to see where they stand financially. Everyone should know what they make, what they owe each month, and how much they spend on specific expenses and simple pleasures each week and month. It’s a good way to stay on track, to avoid debt, and to avoid unexpected expenses. You may end up needing to consolidate debt just to get things more under control.

Unexpected expenses occur all the time. It’s a leaking roof, a deductible to pay after a car accident, or a large co-pay when someone visits the emergency room. It’s a flat tire, or the need for a car repair you didn’t see coming. An unexpected expense might be a flight home to visit sick or ailing family member. Unexpected expenses crop up all the time, and many families are only one unexpected expense away from financial ruin. Don’t let this happen to you. It’s time to learn how to budget for life’s unexpected expenses.

What’s an Emergency Fund?

An emergency fund is the best way to cover unexpected expenses. It’s nothing more complicated than a bank account with funds in it designated only for the expenses you’re not expecting. It’s a bank account that has money in it for flat tires, car repairs, bigger-than-usual phone bills, or anything else you don’t see coming when it happens. This account, according to financial experts, should have at least $1,000 in it. This is a good start, and putting more into the account is a great way to really feel comfortable when the unexpected occurs.

The best way to handle your emergency fund is to place 3 to 6 months of living expenses in the fund in case of an unexpected job loss. A year worth of expenses is even better. Of course, not all families have the ability to put that kind of money into an account and leave it sitting there. That leaves you wondering how you can save this kind of money.

Saving For an Emergency

Those who are one unexpected financial emergency away from financial ruin know they need an emergency fund, but you ask how you’re supposed to save for one when you live paycheck-to-paycheck. It’s not always easy, but there are ways you can set aside funds in this account if you’re on top of your financial habits. Start by creating a budget, and then try using the following methods.

– Save your savings. Use coupons at the grocery store and put away whatever money you saved on that trip into your savings account. If you saved $11 with coupons, put that $11 worth of savings into your emergency fund.

– Place unexpected funds in your emergency fund. If you are given a bonus at work, use it to start your emergency fund. If you receive an income tax refund, use it for savings.

– Change your tax rate at work. If you receive an income tax refund each year, you’re paying too much in withholding taxes. Ask HR to change the information on your W4 to take out less withholding and increase your paycheck. Use the addition to your paycheck each pay period to fund your emergency account.

– Sell what you no longer use, want, or need for cash to fund your emergency cash with.

There are endless creative ways you can start an emergency fund to protect yourself from unexpected expenses. You can take on a second job for a month to raise the money, or you can do odd jobs around the neighborhood such as mowing lawns or babysitting. You should do whatever it takes to fund this account, and keep adding to it when you can to help the amount grow. If you can only afford to put $25 per week into the account, that’s more than $1,000 per year you can add to your account.

Unexpected expenses can cause financial ruin for many families, but you don’t have to live with that fear. An emergency fund isn’t as difficult to fund as many believe, and it’s time for you to learn how to save money and your financial future by creating one of your own.