Determine how much you need
Start building your emergency fund with a specific goal in mind. While your savings goal will depend on your income and expenses, a general rule of thumb is to save enough to cover 4 to 7 months' worth of expenses.
"Everyone has wants, needs and desires when it comes to spending money," says Pete D'Arruda, chief wealth strategist at Carolina Wealth Solutions in Apex, North Carolina. "Make sure you have 7 months' worth of emergency income available for the needs."
Kevin Gallegos, vice president of Phoenix operations for Freedom Debt Relief, says to focus on having enough to cover expenses when setting your savings goal, not on replacing your entire income.
"Remember, in an emergency, we don't fund vacations, fancy new clothes, dining out or other luxuries," he says.
While you may aim higher eventually, Smith recommends making small goals at first, such as saving $1,000 and working your way up to a reserve to cover several months' worth of expenses.