With the state of the economy, it is more important now than ever before to have a “nest egg”.  This should be a separate fund that is only used to store your back up cash.  A good rule of thumb is to have enough money to cover 6 months worth of expenses.  To find what that number may be you can take a look at your monthly budget.  How much money would you need to maintain your current lifestyle, or at least live comfortably, should you loose your job.

Once you have the magic number, open a separate savings account and start making deposits.  Try to place all of your extra income into the account until you have reached your goal.  It may take a little while to get the amount built up, but keep working on it.  Have you heard the saying, “out of sight, out of mind?”.  If you have this money in a totally different account you will be less likely to spend it.

After you have reached your savings goal, do not touch that money unless you loose your income.   Think about it as your life support, this is the money that you will depend on to get you through a life changing event.  Hopefully you will not need it, but it is better to be prepared should the need arise.