If you’re like most people, you charge the cost of unplanned repairs on a credit card or borrow from family and friends. Avoid the stress of unexpected expenses; create an emergency savings account.

To create a rainy-day fund, set a goal. Put away $500 to $1,000 in emergency savings. Then, if the unexpected happens, you may not need to break out the credit card or tap into your retirement savings. Start small with $10 to $20 in an automatic savings deposit each paycheck. Keep on saving until this rainy-day fund can cover 3 to 6 months of living expenses. The chart below shows how much you will need to save each month in order to create a rainy day fund of $500. For example, if you save $83 per month, you will have saved $500 in six months. If you save $42, you will reach the same goal in 12 months.

Monthly Savings Needed To Save $500

Set Up Your Emergency Savings Account

Save automatically and reach your emergency savings goal faster.

1. Decide where to save. Open a separate account with your bank or other financial institution — don’t stash the money in your checking account. When you open your account, watch out for additional fees or minimum balances.

2. Set up an automatic direct deposit from your paycheck. Change your direct deposit instructions to have a small portion sent to your emergency savings account.

Keep Saving

• Look for other ways to boost your savings. Hold a garage sale or sell items online. Trim your dining out budget and eat at home more often. If you get a tax refund, deposit it directly into your emergency fund.

• Round up. Use an app that does the saving for you. For example, if you spend $4.50, the app will automatically deposit $0.50 into your savings account. Some apps are free; others may charge a fee.

• Grow your savings. Keep on saving until this fund can cover three to six months of living expenses. Along the way, you may have to use a portion of your savings for emergencies. That’s okay! If you suffer a setback, see if you can adjust spending to build up your savings again.

• Reserve your savings for true emergencies. “Emergency” does not mean that new phone you have to have or once‑a‑year expenses that you can see coming, such as auto insurance or homeowners’ association dues. Ask these questions to determine if your expense is an emergency: Is it unexpected? Is it necessary? Is it urgent?