What’s an emergency fund and why is it so important every family or person have one? When (not if) something financially unfortunate pops up in our life, like a car repair bill or job loss, reaction is to mend the problem with the plastic in our wallets, which is a big no-no. Yet with an emergency fund, or a readily-available stash of cash, the issue is paid for today and not put off with many more tomorrows.

When every dollar we earn seems already spent in our tight budgets, how do we begin to pull cash out of thin air? You’d be surprised at all the creative ways one can accumulate tiny amounts to make a bundle later, as this MSN Money article explains. One woman interviewed was able to put aside only $10 a month. Nine years later, she has fulfilled a six-month emergency savings fund, plus created a vacation fund and a down-payment on a home fund.

How much cash is enough cash in our fund? Some financial experts like Liz Pulliam Weston claim a bare minimum of $500 for starters – even for the debt-laden. Others like Dave Ramsey up the figure to at least $1,000. In the long run, you’re shooting for an emergency fund that is anywhere between 4-8 months of living expenses. And we’re talking mainly “must-have” expenses, like housing, electricity and food, which should ideally constitute about half of your take-home pay. This CNNMoney article dished out an emergency fund makeover to a 38-year old woman with $4,000 in her emergency fund but falling way behind in retirement contributions.

Now what constitutes an emergency? Anything you have little control over, like an injury, car repair or job loss. Definitely not a pair of soccer shoes for the kids or replacement plants for the front yard. In fact, if the money is easy to get a hold of, chances are is it just as easy to spend.

So where do we put our emergency fund cash? There are two places, really, depending on the size. If your emergency fund is a $1,000 or less, you can place it in something hard to get into that requires breaking, like a bottle or glued picture frame. If you’d feel better the cash was FDIC insured, try an online savings account that issues a debit card and usually a higher yield.

No matter how hard or how long it might take to build one – and how often you end up having to use it – an emergency fund puts you a step closer to financial solvency. Each journey begins with one step, and each emergency fund can begin with one dollar.