Life has a way of throwing us curveballs when we least expect it, and there is usually always a cost involved. We have all faced unwelcome surprises, from a punctured tyre to a poorly pet, that have to be resolved quickly and usually put us at least a couple of hundred pounds out of pocket.

That is why having an emergency savings fund is so strongly advised, so you can cover these unwanted expenses, ideally without having to stretch your monthly budget.

If you are building an emergency fund from scratch and want to know how, how much and the best ways to save, we are covering all the basics in this simple, three-step guide.

Step 1: Decide How Much to Save

Start by determining how much you should put into your emergency fund.

Most experts recommend setting a contingency fund goal that equates to three to six months’ worth of essential outgoings for your household. So, calculate how much you spend on monthly outgoings, like your rent or mortgage payments, any council tax bills or travel to work commitments, your weekly food shop and any other regular living expenses.

To give an easy example, let’s say you spend £1,000 a month on regular expenses. You will want to save £3,000 to £6,000 in a small emergency fund to cover unexpected costs and help you pay the bills if, for whatever reason, you are unable to work.

Read more: A Brief Guide to Mortgages.

Step 2: Set Up A Separate Savings Account and Automate Savings

Importantly, your emergency fund should go into a separate savings account from your general savings and definitely separate from your everyday spending money.

There are a few options here: you can create a dedicated savings pot specifically for funds to cover unexpected costs or look into easy-access savings accounts (if you can trust yourself not to dip into your savings whenever you fancy treating yourself!). Look for an account with a good interest rate that can be easily linked to your current account.

Once you have your account set up, follow your bank’s instructions to automate payments into the new account each month, so the savings build up with no effort from you.

Looking for more information about the types of savings accounts available? Read our guide on Why You Should Shop Around For Savings Accounts.

Step 3: Start Saving

With your emergency fund ready to go, you are all set to start saving. You want to make this as easy as possible, so look into ways to save money across your other expenses so you don't feel the strain when you are building your emergency savings.

Remember, you are aiming to save at least three months’ worth of regular expenses, but there is no rush to get there! You are more likely to stick to a savings habit if it doesn't interfere heavily with your month-to-month spending. Even just £50 or £100 per month will build up nicely over time.

Once you have all the money saved, you can give yourself a pat on the back. But since you have learned to live without this money, we recommend putting it to good use elsewhere, such as into investments, a pension or a bigger emergency fund.

You don't have to be extremely stringent here, but the more money you can put into savings, the better prepared you will be to deal with the financial shock of unplanned expenses – and the easier you will sleep knowing that you will be okay regardless of what unexpected events you might face in the near or distant future.

If you do need to borrow money while you are still building your emergency fund, you will want to be smart about the lender you choose to borrow from. Look at a range of short term loans before you make your decision and make sure you are 100% clear on the loan’s terms and interest before you commit.