Personal finance has changed over the past century, especially in the last 20 to 30 years. Our grandparents and great grandparents were not as familiar with the word “credit” as most of us are today. When they wanted to buy something they paid with cash. If they wanted to buy something big, they saved for an extended period of time and then paid for it. As most can agree, times are quite a bit different now. With credit so readily available (even in today’s economy it is pretty easy to come by) almost everything can be purchased with someone else’s money.

There are many drawbacks to this easy credit access lifestyle we find ourselves in, but one in particular is that people are losing the ability to save. As generations pass on and the new credit-hungry ones become the teachers, there are fewer and fewer people left who know how to put money in the bank and leave it alone. This is especially true when it comes to setting aside an emergency fund. We have all heard the sales pitch: “save 3-6 months worth of expenses!”

With credit so readily available, especially in the form of credit cards, it allows the generations of today to get through an emergency without actually having any money. Their car breaks down, the air conditioning unit goes out during a heat wave, you name it. These things happen all the time. It wasn’t many years ago that after this happened once, a person was singing a different tune when it came to saving some emergency money. But now you can just charge it and pay back over time. This quick fix helps people avoid that pain that could have shocked them into saving.

So Why Should You Have an Emergency Fund?

While the list is long, there are few standout reasons why having cash in the bank is better than putting something on a credit card. First, when you can pay cash for an emergency, that emergency doesn’t go home with you and set up shop in your guest bedroom for months or years. If you have to make a sudden trip to the ER that costs you $1000, you can pay that bill and go home, never thinking about it again. When you put it on a credit card, that charge will impact your monthly expenses until you pay it off, reminding you again and again about that emergency. Second, emergencies cost more when you use a credit card. Talk about adding insult to injury. That same ER visit could cost you two or three times the original amount, depending on the interest and how long it takes you to pay it back.

Finally, when you pay cash for an emergency it feels less like an emergency. Visiting the ER or having the engine blow on the family car is stressful enough. Do not add additional anxiety by piling money worries on top.

Eric Stauffer is part of a credit card processing watchdog group that helps educate individuals and small businesses about the merchant services industry.

Just when things are going great, something devastating happens. The refrigerator stops working or your car breaks down. You soon realize you never should have purchased that big screen HDTV because that money sure would come in handy right now. In cases like these, having an emergency fund can be a metaphorical life saver. An emergency fund is money set aside for just that—an emergency. It’s a dedicated fund that should be available immediately for unforeseen financial problems. An emergency fund is something that needs to be planned for, implemented and not touched unless you actually need it. Following are 7 ways to create an emergency fund.

Save Your Change

It may sound ridiculous but saving the change that you accumulate every day can add up over time. Keep a large jar beside your front door. When you come home, drop the change that’s in your pocket or purse into the jar. Every few weeks take the change to the bank and deposit it into a savings account—your new emergency fund account. You’ll be surprised at how quickly your new account will grow.

Save Your Dollars

A much quicker way to save money for an emergency fund is to stick your dollar bills into that change jar along with the coins. A few ‘Washingtons’ dropped in every day can amount to hundreds of dollars over the course of a year. Instead of being spent today, the money will be available for an emergency tomorrow.

Your Emergency Fund as a Monthly Bill

Every month you pay your bills—car payment, house payment, utilities, insurance premiums, the list could be extensive. You’ll probably never even miss the money if you treat an emergency fund as a monthly bill. When you’re writing the checks set aside a certain amount and transfer it to a savings account designated as an emergency fund. The money will collect interest until it’s needed, and you won’t miss spending it. It’ll simply be another bill that you budgeted for.

Extra Cash

Every once in a while, money you didn’t anticipate getting seems to fall into your lap. You may receive a bonus at work, or be given an inheritance from a loved one who passed away. Even though the amounts may not be much, it is ‘found’ money. It’ll take some will power, but instead of rushing out to celebrate your good fortune, stick it in your emergency fund. If you’re serious about creating an emergency fund, your tax return should end up there, too.

Take a Second Job

A quick way to build an emergency fund is to take a second job. Use the money from your regular job as you usually do, for everyday expenses. The total income from your second job should go into the emergency fund. Have it deposited into the account directly, if possible. That way you won’t be tempted to use it for non-emergencies, like a much needed round of golf.

eBay or a Yard Sale

Once a year or so, go through your collection of unused items and sell them off. Have a yard sale or sell them on eBay. The old ball glove you never use anymore or the cross-country skis you had to give up when you blew out your knee may not be worth much by themselves, but cumulatively they can bring a nice chunk of change. Designate the money from their sale to go into your emergency fund.

Raises at Work

Things are going well at work, and the boss gave everyone a healthy raise. Instead of spending that money, continue to get by on what you’ve been living on. Put the extra money into the emergency fund where it’ll draw interest. It may even be possible to have the extra money deposited directly into your savings account. Any of these suggestions will work, but only if you’re dedicated to creating and building an emergency fund that is only to be used in case of a true emergency.

Guest post from Bailey Harris, who writes about car insurance quotes for www.insurancequotes.org.

It’s a good idea for everyone to have a savings account that will act as an emergency fund in case an urgent need for funding should arise. If you have an emergency fund, you’ll be prepared if you suddenly lose your job or someone in the family gets sick.

How much should you save as an emergency fund? The opinions of financial experts vary, but most recommend saving enough in your emergency fund to cover between three to eight months’ worth of expenses. When figuring your expenses, be sure to include things that don’t occur each and every month, such as back-to-school clothing and Christmas gifts.

Most people without emergency funds don’t think they have room in their budgets for savings, but it’s important to make room for it. Look for things you can cut back on in order to have money to save. A realistic goal is to start saving about 10% of your earnings. This is an effective way to ensure that you’ll have a cushion to fall back on when something goes wrong.

In order to save money for an emergency fund, you may find that you need to stop eating out in restaurants for a while or cut back on your clothing budget. Other things that can help cut expenses are switching to a lower interest rate credit card or moving to a less expensive home. All of these changes will result in a larger amount of money available in your budget that you can put toward starting an emergency fund.

The money for your emergency fund should go into a separate account from your checking account so that it is more difficult to spend. Try to get an account with the highest interest rate possible so that your emergency fund can be earning money while it sits in the bank. This will help you maximize the potential of the money that you’ve made so much of an effort to save.

This article was written by Leonardo Steven Kurgen. Please click here to learn more.