Injury that affects the family or budget for three weeks or less
Illness that affects the family or budget for three weeks or less
Car or home repair problem that is repairable with $500 or less
Emergency travel due to medical, death, or family emergency for $500 or less

With this type of emergency situation, you will want to set aside a set amount every month out of your budget for these types of emergencies. The amount should be at a higher percent than what you have for overall savings. The reason is that you need to be able to cover these types of emergencies pretty regularly. Taking out a loan that has interest because you are not prepared for these types of emergencies is enough to ruin any budget. Start with around $50-$100 minimum.

These emergencies will usually cost a little less, in just the situation that someone is ill for a week or so, however if there is loss of work, major medical expenses for that week, or prescriptions, then the cost can be up to the full $500 or more. So use caution. When you have depleted this fund, it needs to be replenished as quickly as possible.

Next you have emergencies that need to be budgeted for separately from the short-term emergencies. This is the type of emergency that has three months to one-year affect. Here is a list of some reasons that this type of emergency would happen.

Loss of job for more than one week therefore causing a loss of income for more than the amount of $500
Major illness that lasts three months to a year that will cost more than $500
Family emergency that requires travel for a length of time for a week or more resulting in more than $500
Repair of home or car that causes a debt to your income for more than $500

These types of emergencies cause a major hit to your family income or budget. With a loss of a job, or major medical emergency, insurance will likely come into action with some of the support. However, it takes time for many of these actions to happen therefore, you will need money to support your family until the other support comes in. The amount of money that should be set aside for these types of emergencies will need to be enough that it will cover a minimum of three months of your standard income. The best amount should be for six months of pay. Therefore, to plan this out in a budget, you would need to work an equation like this:

$3000 per month times the amount of months you plan for your emergencies. In the minimum three months, so $9000 dollars. Then take the $9000 and divide that by twelve months. That would be $750 per month. That is a great deal of money and many people may not be able to afford that, therefore, it is a good idea to put as much as possible for this type of emergency as you can each month. Some months may be more than others.

People will also set money into an emergency fund for their budget if they get larger lump sums of money, taxes, inheritance, and extra income from a job, or bonuses etc.

However you plan on saving for these types of emergencies, it is very important to make sure that you set some money aside. Any budget no matter how well planned will fail if there is not some sort of money set aside for emergencies. This is the best way to budget for emergencies.