David Bach recommends these three simple steps to growing your emergency
fund in The Automatic Millionaire:
1. Decide how big a cushion you need: The author recommends a
minimum of three months’ worth of expenses but stresses that more
is better.
2. Don’t touch it: According to Bach, the reason most people don’t
have emergency money in the bank is that they think they have an
emergency every month. A real emergency is something that threatens
your survival, not just your desire to be comfortable.
3. Put it in the right place: The author recommends putting emergency
money to work so it grows.
Small steps are inevitably going to be your first steps, and they definitely
count. Once you have put aside $25.00 one week and discovered that
you can live without that $25.00 in your spending account, then you
have the confidence to know that you can do it again. You may even
have the confidence to think, “Well, hey, if I put aside $25.00 and I didn’t
miss it, I’m going to try to put $50.00 aside and not miss it.”