Anything is better than nothing. Even $500-$1,000 saved can be useful towards small emergencies. But what about big emergencies such as loss of a job? Since one does not know what can go wrong it is better to be prepared for a big emergency. Ideally you should have access to funds that cover a few months of your family expenses. Basically you should look at what your monthly ‘needs’ are that include rent or mortgage, auto loan payments, credit card payments, various insurances, home maintenance, food and home supplies, utilities, clothes and other essentials.

You should make the list of expense items and amount for each by reviewing it with your family members. Let’s look at an example. If your after tax income after retirement savings is in the range of $3,000-$4,000 then having $9,000-$12,000 will cover you for about three months. $15,000-$18,000 will give you higher cushion and last for about five months. Your goal will be then to resolve the situation such as finding another job during 3-5 months.

Most of us do not have $9,000-$12,000 sitting around. So what to do? You have to start somewhere and come up with a disciplined plan to save money regularly either on a weekly or a monthly basis. You can save this money over a period of time. It doesn’t have to happen in just one year. You can achieve creation of this saving say over two-three years. That means you will need to save $3,000-$4,000 per year if you save the total required $9,000-$12,000 over three years. If you put away $240-$325 per month will create about $9,000-$12,000 in savings with 3% growth investment vehicle.