An emergency fund shouldn’t be a few bucks in a hidey-hole. It's a necessary element in your personal finances that could potentially protect your long-term investments and offer security during a costly, unexpected event. With this guide, we’ll explain how you can start saving, where to put your savings, how much to save and how it all integrates with your overall financial planning.

An emergency fund is money set apart in your budget to cover unexpected expenses like  a trip to the emergency room, repairing a car or loss of employment. Relying on credit cards or making an early withdrawal from a retirement account can take an unhealthy toll on your finances. Building a fund to access in case of an emergency will protect your credit score and your investments should you ever be face with unexpected incidents.

How should you start an emergency fund, you ask? First, you must have a grasp on your living expenses. What are your monthly costs for housing, utilities and groceries? How about car payments and insurance? Don’t forget to list taxes and debt payments. After you have your monthly expenses totaled, multiply that number by six. That’s the amount you should maintain in an emergency fund.

What if there’s no money left to save after your monthly expenses have been covered? It’s time to be honest with yourself about your spending habits. Are you eating out a lot? How much money goes toward entertainment? Check your subscriptions. Are you paying for multiple services that could be consolidated? You may even have charges from subscriptions you’ve forgotten about that you aren’t using. Find the places money can be saved and use the recovered costs to supplement your emergency savings. Most importantly, be reasonable about how much you commit to saving each month, so you can consistently set that same amount back. Establishing savings is a marathon, not a sprint. Set a date on the calendar to meet your emergency-fund goal and plan a meaningful reward for yourself once you achieve the goal.

If you don’t trust yourself to save a dedicated amount, automate a direct deposit to an account specified for your emergency fund that’s scheduled to post the same day you receive your paycheck. The account should be liquid, so it’s easily accessible if you need money. Look for high-yield, low-risk account options that pay a better annual percentage yield (APY) than traditional checking or savings accounts. Give close attention to the account agreement if you choose a high-yield option. Their rates aren’t fixed and can vary with market changes.

Money market funds are another option that could provide higher returns, but you may have a one-to-two-day waiting period for the funds to be sold into cash. Although, money market funds are considered low risk, they can lose value. High-yield and money market accounts each have their own trade-offs in terms of withdrawals, account balance minimums and interest, so you’ll need to research which one works best with your risk tolerance and need for accessibility.

Don’t waste a good windfall. Unexpected income such as a tax refund, year-end bonus or inheritance can boost your emergency fund and reduce the time it takes to gather your goal amount. Building your fund on a short-term basis better supports your long-term financial goals because it frees up the money you budgeted for emergencies to be used toward other investment that could make a positive impact on your financial security.

An emergency fund is so much more than a soft place to land during a challenging time, it’s a significant tool you can implement to support yourself and keep a healthy pace on your road to financial freedom.