A recent Bankrate survey found that nearly half of Americans indicate they cannot cover a $1,000 emergency expense. Having an emergency fund can serve as your safety net for life’s unexpected costs. Whether it’s medical bills, car repairs, or even a sudden job loss, your emergency fund is there to catch you.

In this week’s Money Wisdom Question Series, Heath Grossman, CFP® walks through a few steps to create an emergency fund tailored to your needs.

1. Calculate Your Expenses

First, understand the basics of calculating your monthly expenses. Account for both fixed expenses, like rent or mortgage payments, and variable expenses, such as groceries or gas. These calculations help determine your total monthly spending, so you can set realistic savings goals.

2. Determine How Much You Need to Save

Emergency costs can be overwhelming and add up fast. Make sure you know how much savings you’ll need for your specific situation. A good rule of thumb is to have enough in your emergency fund to cover anywhere from three to six months of your expenses.

3. Create a Budgeting Strategy

Saving consistently may sound easier in theory than in practice, but it’s important for your long-term financial security. Start by putting away a little bit of money at a time toward your emergency fund. You can implement this budgeting strategy bi-weekly or monthly. If you’re carrying any debt, make sure to address that as well within your plan.

4. Consider Savings Options with Easy Access to Cash

Where you keep your emergency fund is key. Savings accounts, money market accounts, and Certificates of Deposit (CDs) are all vehicles that provide easy access to cash. Certain online savings accounts specifically can provide more interest than your local bank.

5. Start Saving Now and Replenish When Needed

You always want to prepare for the unexpected; that’s what retirement planning is about. As you’re saving, an emergency fund can provide greater peace of mind. If an emergency arises, you have the money there to cover it. After you use a portion of your fund, make sure to replenish it as soon as possible to get back on track.