Step 3: Top Off Your Emergency Fund
You’ve already gotten a start on your just-in-case account and you’ve been saving for the long-term, so now it’s time to add even more cash to your emergency stash. Most financial planners recommend that you ultimately have three to six months’ worth of living expenses set aside. If you have a fluctuating income (say, you’re paid on commission), you may need to save even more—about six to nine months’ worth, says Jones, since a calamity could come at a time when your income is reduced. If possible, use a tax refund, a bonus, or a recent raise to help fortify your rainy-day fund. And going forward, track your spending carefully (Mint.com is a great resource) to determine where you can cut back in order to save more.