You never know when your car might break down, your heating system at home might stop working, or your boss might inform you that you're suddenly out of a job. Like it or not, financial emergencies can happen when we least expect them, and if we're not prepared with cash reserves, we risk racking up costly debt and damaging our finances in the process.

Unfortunately, a recent report from MassMutual confirms that Americans continue to fall down on emergency savings, with 52% of families with a household income of at least $50,000 having less than three months' worth of living expenses tucked away. If you're behind on emergency savings, or worse yet, have no money set aside in the bank at all, it's time to change your ways -- before an unforeseen expense you can't afford lands in your lap.

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How much money should you set aside for emergencies?

Regardless of what your bills look like or how much you earn, it's a wise idea to sock away at least three months of living expenses. For better protection, though, you should really aim to save six months' worth of living costs. This especially holds true if your job isn't stable, and you're convinced that if you were to lose it, it would take some time to find a new one.

When calculating your emergency fund, you don't necessarily need to account for every expense you incur in a given month. For example, while you do need to factor in bills like rent, heat, food, and transportation, you don't necessarily need to include line items like cable TV and clothing in that equation. The reason? If you're strapped for cash, you could do without enhanced TV service and wear the clothing you already have for the time being, whereas you won't be able to get out of paying your electric bill.

Once you figure out how much to save for emergencies, the next step involves scrounging up the cash. To do so, you might consider:

  • Cutting corners in your budget: If you're willing to eliminate or reduce a few minor expenses, or cut back on one major one, like housing, you'll free up cash that can go directly into savings.
  • Banking your raises and bonuses: If your regular paychecks don't allow for much savings, take whatever extra money you get and put it into the bank.
  • Getting a side hustle: If you're willing to work a second gig, you'll have an opportunity to earn money and potentially boost your job skills at the same time. And since that cash won't already be earmarked for existing bills, you should have no trouble saving all of it.

Having money in an emergency fund means buying yourself peace of mind the next time an unforeseen expense comes your way. If you're lacking in savings, pledge to start doing better. That doesn't mean you're expected to amass three to six months' worth of living expenses within the next month, or even the next year. What it does mean, though, is that you should start taking steps immediately to slowly but surely boost your cash reserves so that with every day that passes, you're one step closer to being financially protected.

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