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How to Build a "Rainy-Day" Fund

Build your own rainy-day fund and borrow from yourself. The best way to avoid a cash crunch is to put money into an emergency savings account that you can use to pay for unforeseen expenses. Experts say this fund should equal about three to six months of living expenses to get you through a difficult period without having to take out a loan or borrow from retirement savings. "Saving money can seem impossible when you are staring down at a stack of bills and other expenses, but many people are able to make small, simple changes in their habits or banking practices that can make the difference," said Sandra Thompson, Director of the FDIC's Division of Supervision and Consumer Protection. Possibilities include having your paycheck directly deposited into your checking account with a portion automatically placed into your emergency account.