A rainy day fund or emergency fund is a savings fund that you can set up that should be kept separate from all of your other accounts in order to make sure that you don't pull money out when it's not an emergency. That would defeat the purpose of a rainy day fund. Here are some basic suggestions on how much to save, where to keep it, and how to do it.

How much money should you save for a rainy day?

Yes, the question that everyone wants to know; how much should you be saving for that "rainy day." Well, the general recommendation is that you save as much money you would need to cover your living expenses for at least three months; best scenario six months. If you are paid on commission, or your job is less secure while lay offs are increasing you may want to consider saving more than that. It really depends on your situation but for general purposes you should have at least three months of salary to live off of in case something happens.

Where to keep the money

Let's first talk about where not to keep the money. The worst place to have your rainy day money is your current checking account. While this may seem logical because you want the money accessible you are more likely to spend it rather than save it. Keeping it in your regular savings account may not be that great of an idea either unless it's difficult to just pull money out of the account or transfer it. Money market accounts are a great place to keep your rainy day savings because they are very easily accessible.

How to save for a rainy day

Some people may think they are ready to start saving for that rainy day but then realize that they must cut back on some of their spending in order to do so and don't like that idea. The truth of the matter is if you want to save you have to cut back somewhere you get another job. It's much easier to try the first option before you go out and work 24 hours a day. Here are a few ways you can start saving for a rainy day:

• Look at your monthly bills. Things like your phone bill, cable, and internet bills are all things that you could do less of or sometimes cut out entirely. If you're really trying to save then be a penny pincher. You can get a basic phone line for about eleven dollars a month (plus taxes and fees) compared to having all the extras and paying fifty plus dollars. And do you really need to have tevo and the movie channels. Cut back your spending by getting the basic cable TV package and you could save about $30 right there.
• Use cash. Unless you can pay off your credit card in full each month (which most of us can't, that's why we use credit cards) then get into the habit of paying with cash. If you don't like carrying cash around in your wallet then get yourself a debit card which is exactly like using cash because it comes straight out of your checking account.
• Shop wisely and go generic. If you're going to go grocery shopping or need new clothes then don't go buying the name brand products. If you're not a coupon cutter then maybe you should turn into one because you can save a lot of money using coupons at the grocery store.
• Save your gas. If it is at all possible to use some other form of transportation to get to work or wherever it is you need to get then use it. With gas prices skyrocketing you can save loads of money by taking the bus, or carpooling with someone.

Well there you have it, how much you should save, where you should put it, and a few ideas on how to save for a rainy day. Hopefully these suggestions will come in handy as you begin to set up your rainy day fund.