One of the best financial decisions—and actions—you can make is to establish an emergency fund in case something unpredictable happens. And unpredictable things happen all of the time. Your car suddenly dies. You have unforeseen medical bills and your insurance won’t cover them. You lose your job. You need a new dishwasher. These are frightening and realistic possibilities that are not uncommon. But an emergency savings fund will bring you peace of mind because you will know that no matter what happens, you are covered, and your normal style of living will be unaffected. Here is what you need to know for how to create an emergency savings fund.

Slow and Steady

A lot of people live paycheck to paycheck, which makes it seemingly impossible to save money for an emergency. Ideally, your emergency savings fund will cover you for six months, but start small. Slow and steady wins the race. Start with a low goal, such as $200. You can reach that in two months if you put $50 from your biweekly paycheck in. If you have no problem staying afloat after the two months, consider raising the contribution.

Setting up an automatic deposit from your paycheck into your emergency savings fund is a great way to put the money out of mind. You likely already have automatic deposit into your checking or savings account. You can do it also for your new emergency account. Additionally, if you have dividend-earning stocks, you can regularly transfer some or all of your dividends to your new emergency fund.

Keep it Accessible

If you find yourself in an emergency, then you may need cash ASAP. Therefore, the money needs to be in an accessible place, not an account in which a transfer will take a number of days to go through. A savings or checking account will do the trick. Sure, such an account won’t provide a high yield, but you can put nonemergency money in stocks and bonds. Emergency money should be liquid—cash—so you can grab it right away.

Ways to Begin

Once you set up the emergency savings account—and it should be in a place where you won’t be tempted to touch it except in an emergency—then there a number of ways to find chunks of money here and there that you can stick in the account and never miss.

Avoid Frivolous Expenses

Bring the electric bill down by turning the lights off in the house. Use your car less by taking advantage of public transportation once in a while. Carpool. Eat out a little less. Don’t order more than you need at restaurants; most entrees feed two. Pack lunch for work sometimes. Don’t spend your bonus.

Find Better Deals

When buying an item, such as a television or microwave, shop around. See what the popular places are charging, then do the research to find a deal. Stick the savings in the emergency savings fund.

Shop for better deals on home and car insurance. Bundle your insurances with one company, and stick the savings in the fund.

Credit Cards

Pay your monthly bills off in full to avoid paying interest on your credit card bills. Form good habits and use credit cards on only what you can actually afford.

Also, call up your credit card company and ask for an interest rate reduction. Savings are just one phone call away.