Post written by Leo Babauta.

Building up an emergency fund, if you haven’t already, is one of the most important things you can do to help your finances.

But you knew that.

It’s common financial advice, actually, but what’s not so common is how to actually do it. Obviously those who haven’t saved up an emergency fund have a difficult time saving money, even if they know they should.

So today we’ll look at some strategies for building up an emergency fund, for those of us who don’t have it so easy.

Why It’s So Critical

I don’t like to use the word “critical” often, because it’s often an exaggeration. But in this case, when we’re talking about the health of your finances, an emergency fund is definitely critical.

If you are having financial problems, the most important steps you can take immediately are 1) reduce your spending by being more frugal; 2) stop getting into debt; and 3) build an emergency fund of $1,000 (and later you can increase that to the standard 3-6 months of income).

Here are a few reasons an emergency fund is critical to your financial health:

Stop getting into debt. When an emergency comes up, if you don’t have an emergency fund, the first thing that will be cut from your budget is your debt repayment. You’ll use your credit card to pay for the emergency, and then you’re deeper in the hole. An emergency fund stops the need to use credit to pay for emergency expenses. Smooth out your budget. If unexpected things come up, you don’t have to continually re-factor your budget to pay for these things. With an emergency fund, it makes budgeting much easier. Prevent late fees. If you are living paycheck-to-paycheck, you will come up with times when you have to pay a bill late, or overdraw your bank account. With an emergency cushion, you avoid these financial hits. Get ahead. If you can get a month ahead, your financial stress will drop way down. Instead of always playing catch-up, you can pay your bills ahead of time and sit back and relax.

21 Strategies for Creating an Emergency Fund

If you have trouble saving, it’s not enough to tell you how important it is to have an emergency fund. You need some strategies for doing it.

Please note that you should choose the strategies that work best for you, and perhaps combine some of them if that works better.