Many Americans live paycheck to paycheck with no funds available in the event of an emergency. One of your first financial goals should be building a cash reserve, or emergency fund.

Your emergency fund will allow you to tap into your cash reserves instead of paying with credit cards or selling your assets.

How much money to save

Your emergency fund should contain 3 to 6 months of living expenses. Your circumstances will dictate how much cash you need in reserve.

That doesn’t mean 3 to 6 months of your take home pay. It’s enough to cover your expenses — mortgage or rent, debt repayment, food and car payment — for 3 to 6 months.