This week one of the next steps I had for Mary Ann in her MoneyMakover was to establish an Emergency fund. Most experts including personal finance bloggers think they’re a good idea. I do as well

However just because it’s a good idea, doesn’t mean an emergency fund is without controversy as well. For instance Free Money Finances asks if establishing an emergency fund has priority over paying debt?. And even if the firm decision to establish or grow the fund, there’s question of how much you need. Lifehacker.com tells us how to calculate what someone needs given their expenditures.

Now that you know what you need, how do you save for it?

If you already have enough saved in your emergency fund, compare yourself with others who’ve taken MyMoneyBlogs’s poll. Is it too much as The Tao Of Money Making might think? Still have questions about emergency funds? Money Smart Life let us in on everything you wanted to know, (but were afraid to ask).

My personal feeling is that a large emergency fund is critical for younger people with fewer asset categories. Someone who is 40 with a house, brokerage accounts, 401ks, IRAs, and other assets still needs an emergency fund, but can also be more creative with funding a longer term emergency horizon with both sales of assets, a home equity line, or as Advanced Personal Finances suggest the Roth IRA. Someone in their early 20s usually doesn’t have those options. Having an emergency fund is what allows the younger person avoid using a credit card for emergencies and therefore establish a better financial footing.

p.s. Some of the articles linked are older, but emergency funds are a classic concept.