Saving for an emergency isn’t really the fun type of saving — like, say, saving up for a big purchase or vacation — which is partly why people just aren’t doing it.

Another big reason people ignore it is because they simply don’t realize how damaging an unexpected expense can be until it’s too late.

But it’s time to wake up, because $#*! happens — and when you think about it, not preparing for it is just dumb.

It’s a lot easier to think, “it won’t happen to me””¦  until it does, and you can be sure that something will happen. Hopefully it’s not too serious, but life is unpredictable and one thing you can predict is that some type of unexpected expense is going to come up.

In fact, according to a recent survey, more than 40% of Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who did.

And there’s one very easy way to minimize the damage — prepare for it.

Even when you aren’t making much money, there are always ways to cut back, and by building a buffer between you and life’s unexpected financial shocks, you can protect yourself from potentially losing everything.

The alarming data

According to a survey by Bankrate, only 40% of Americans have savings they can rely on in an emergency. That’s a scary number!

Another survey found that almost two in three Americans, including 46% of the highest-income households, don’t have enough savings to pay for a $500 car repair or a $1,000 emergency room bill.

And for many, it’s not that they aren’t making enough money — 10% of people making at least $100,000 a year said they have no money that they think of as savings.

A lot of people who participated in the survey even said they knew they should have emergency savings that’s easily accessible — but they don’t.

The ultimate goal of managing your money, saving and all the rest, is financial independence — being able to do the things you want to do, when you want to do them.

When you use a credit card to pay for a big expense you can’t afford (like a big car repair or medical bill), that’s a very quick way to sabotage any effort you’ve made to improve your financial life. Because when you can’t afford to pay it off, the bill continues to get higher and higher and the damage gets worse and worse.

So why aren’t people saving? There’s no easy or clear answer. Although some people know the importance, others don’t, and then there are also questions like: How much do I save? Where do I get the money? Where do I put it?

Bottom line: By not saving for an emergency, you put yourself and your family at risk — not only could it cause you to go into serious, sometimes detrimental, debt, but it could also damage every aspect your financial life, and your life in general, for years or even decades.

The idea here isn’t to scare you, but to emphasize just how important saving for an emergency is for your life now and down the road.

And we’re going to help you get there! This guide walks you through everything you need to know, including how to get started, mistakes to avoid and where to find extra money to put toward your savings fund.

How to financially prepare for an emergency

Don’t rely on credit cards

You should never use a credit card to cover the cost of an emergency.

Credit cards often come with pretty high interest rates — so if you swipe a credit card to pay for an emergency, you will just end up facing a bigger bill down the road. And the bigger the bill, the longer it will take you to pay it off, which will then not only cost you more in interest, but will also damage your credit score.

One example is medical debt. You don’t want to put an unexpected medical bill on a credit card. You’re much better off negotiating a payment plan with the hospital or provider — which you pay over time — than putting the bill on a credit card.

Another reason is because medical debt is now factored into your credit score differently than consumer debt, which is anything you put on a credit card. So an unpaid medical bill will no longer impact your credit score as severely as it would have in the past.

And while ideally you don’t want any type of debt in your life, having a medical or hospital bill — instead of a credit card bill — is better for your long-term financial status.

Two types of emergency savings you should have

The best way to save for unexpected financial shocks is to have two separate emergency funds: a rainy day fund and an emergency fund.

• A rainy day fund is money you might dip into every once in a while to cover an unexpected expense, like a medical bill.

• An emergency fund is a bigger, longer-term savings fund. This money should be able to cover at least three to six months worth of living expenses in case you can’t work for a period of time, for whatever reason.

If you’re starting from scratch, these goals may seem impossible — but you can get there!vThe best way to approach saving is to start with baby steps and then build up from there.

Where to keep your emergency savings

One very important thing to remember about emergency savings is that the money should be easily accessible if you ever need it.

So you want to keep the money somewhere safe and where you can get to quickly, like in a savings account. The money won’t grow much, but you also don’t risk losing it.

How to find extra money to boost your savings funds

Reevaluate your priorities

When you’re trying to build your emergency savings funds and also save for your other big goals, you have to prioritize where your money is going.

Sit down and look at how you’re spending your money each month. If your spending habits are not aligned with your goals, you likely won’t reach them. Priorities change over time, so what worked for you five years ago probably isn’t the best plan anymore — especially if you want to adequately prepare for an emergency and also save enough money to reach each of your goals, when you want to reach them.

So re-prioritize where your money is going and give every single dollar a purpose that will keep your money on track with your goals.

If you’re living a lifestyle that you can’t afford, meaning you don’t have enough money each month to put toward each of your savings goals, then it’s time to make some changes. This doesn’t mean you have to turn your entire life upside down, it just means you have to start paying attention to make sure your habits are aligned with your goals in life. Making a few small changes now can drastically improve your life in the future.

Reevaluate your budget & reduce expenses

Even when the budget is tight, there’s always room to cut back.

There are tons of little ways to reduce your monthly expenses without completely changing everything about your life. Even if you do have to switch up your routine in order to save, it’s worth it! Plus, as you start to reduce wasteful spending and see your savings begin to grow, it’ll give you even more motivation!

So if you haven’t reevaluated your budget in a while, that’s a great place to start!

Take last month’s statements, including your bank and credit card statements, and go through every single transaction line by line. Identify recurring expenses that you either don’t use or don’t need and cut them. Even if they’re only costing you $3 or $5 a month, if you cut out a few of those little expenses, it can add up to a good amount of cash that can go into savings.

Also look at expenses you can combine, like subscriptions that offer the same features or ones you can share with a family member or friend. Even changing where you shop for groceries and other things can save you a lot of money over just a couple of months.
Here are a few easy ways to start cutting costs:

• Shop for a cheaper cell phone plan

• Combine subscriptions

• Cancel subscriptions you don’t use

• Re-shop your car insurance

• Change where you shop to get better prices (this is a great way to save on the cost of groceries!)

You also want to identify any areas of the budget where you’re spending way too much than you think is necessary. It can be easy to overlook the cost of a few expensive bottles of wine when you aren’t paying attention. So figure out where you’re overspending and reduce those costs.

If you aren’t disciplined enough to make yourself do it, which most people aren’t, then start using cash. Make sure there’s enough money in your accounts to cover your bills, and then just take cash out to cover your other expenses, like groceries, going out with friends etc. That will force you to only spend what you have.

Increase your income

Finding a higher-paying job is obviously a process, but you can increase your income each month without getting a pay raise.

There are plenty of ways for pretty much anyone to earn extra cash.

Bringing in some extra money each month can be a great way to fund your emergency savings without having to totally change everything about your lifestyle.

Check out this list of 18 ways to earn an extra $1,000 or more.

Make it automatic

Once you cut back on your spending and start to have some spare cash each month, it’s important to keep it in a safe place so you won’t spend it — because no matter how disciplined you are, if it’s there, it’s tempting.

Open a separate savings account for each fund: rainy day and emergency.

Then budget out how much extra money you will have each month and set up an automatic direct deposit from your paycheck to send each amount into each account. That way the money is put into savings before you have a chance to spend it.

Continue paying off debt

Just like your bills and savings goals, paying down debt should also be part of your monthly budget. Do not ignore any debt you already have ‘ that will just end up costing you more money and it will also damage your credit score.

The only way to really get ahead with your savings is to reduce your debts, because the longer they linger, the longer it will take you to reach your savings goals.

It’s important to save and still pay down your debts at the same time, particularly credit card debt, since credit cards typically carry high interest rates.

BUT, before you prioritize debt, make sure you at least have enough saved in your rainy day fund! That will prevent you from racking up even more debt.

Then once you have those savings in place, if you have big credit card debt, consider transferring it to a card with a lower interest rate if you can qualify. Then look at your statement and see what you would need to pay each month to have the debt wiped out in three years ‘ and make that your goal!

Add that amount to your monthly budget, just like every other expense and goal.

If you have multiple credit cards carrying a balance, start with the credit card that has the highest interest rate and put as much money toward that debt as you can each month, while still paying the minimums on the other cards and also setting money aside for your emergency funds.

Then once that card is paid off, move to the card with the next highest interest rate and so on.

Final thought

Every step you take to improve your financial life will help improve your life down the road.

You have to make the decision to take control of your own money and your own life, because the reality is, no one else is going to do it for you.

So if you want to set yourself up for success, you have to start taking the right steps to get there.

Simply prioritizing and paying attention can seriously change your life. And once you get started, you will quickly realize how empowering it is to create your own success.