It is always beneficial to periodically take a fresh look at your monthly income and expenses. Every few months, do the following:

1. Total up your monthly take-home income to find out what you have to work with.
2. Categorize your expenses into:
   • Essentials: bills you have to pay, like housing, food, utilities, medicine and debt
   • Non-essentials: things you could defer or things you could go without, such as entertainment, subscriptions, restaurant meals, and so on.
     Subtract your total expenses from your take-home income to find out what you have available to devote to savings.

If you need more information on creating a budget, download our spending plan worksheet to get started. Use this worksheet to calculate your monthly expenses and income to get an idea of what you have to work with, what your commitments are, and what you have remaining to devote to your goals.

Cash savings are a lifeline for minimizing the effect of income interruptions, unpredicted expenses, or other financial setbacks. An emergency savings account offers you peace of mind, and — when a setback happens — allows you time to figure out a longer-term solution.

Most experts suggest setting aside enough emergency savings to cover three months of expenses – but getting started with any amount will help. You can set a mini-goal to cover two weeks, or one month of expenses, and build from there.

And remember, even if you don’t have an emergency savings account in place yet (and nearly 1/3 of us don’t), any emergency savings lets you prepare for or recover from an unexpected setback. Think of your emergency savings as preventive medicine and first aid.

Your expenses can be prioritized. The first step is to organize your expenses by priority and pay most important, essential bills first. The main bills you should pay first are grocery/food, child care, and essential medicine as well as housing. GreenPath offers a complete list of how to prioritize your expenses.

After you have priority bills in order, take a closer look at non-essential expenses and see what you could live without to free up more money for your emergency fund. This can include temporarily canceling subscriptions or deferring a non-essential purchase until you reach that savings goal. Cutting back on non-essential expenses will help you reach your savings goal.

You should also audit your essential spending to find places to save. You can shave dollars off of your grocery bills, energy costs, entertainment and transportation costs to redirect to savings.

A key to emergency proofing your finances is paying off all debt.

Paying off your debt isn’t always easy, but having a plan can go a long way in achieving your financial goals. Two of the most popular strategies for paying off debt on your own are the snowball method and the avalanche method. You can choose the method that works best for you.

It is important to note that paying the minimum amount on your credit card bill is more expensive overall because you end up paying more in interest and fees. More proactive strategies for paying off debt quicker is working to lower your interest rate.

Another option is to temporarily divert money to your emergency fund and pay less toward debt so that your emergency fund grows quickly.