MINNEAPOLIS (WCCO) — Car trouble? A chipped tooth? Maybe your furnace is on the fritz? A study by bankrate.com found 63 percent of people couldn’t come up $500 to cover it from their savings.

So, how much should we set aside for emergencies? Good Question.

According to bankrate.com, 40 percent of people experienced some kinds of unexpected expense last year. Some people used their emergency savings, while others turned to credit cards, family and friends or reduced spending in other areas.

“As a general rule of thumb for everyone, we should have at least three months’ worth of cash reserves to cover our expenses,” says Brad Johnston, founder of the Johnston Group, a wealthcare advisory firm. “That day-to-day spending that you depend on that’s critical to your happiness, that should be somewhere easily accessible.”

Johnston recommends people shore up their emergency savings even before they save for retirement. He says people should consider saving for emergencies as an opportunity to make a commitment to yourself.

“Each individual is different,” he says. “But, emergency savings is just that, it’s emergency savings. Retirement is a longer-term strategy that incorporates a capability to grow your assets or produce income.”

He suggests putting the money is stable vehicle, like a savings account or a money market fund at a brokerage firm. He says people should start small and build confidence to working their way up to larger amounts.

“I think when people hear a number they might disqualify themselves, like I might say, why you don’t want to run a marathon,” he says. “That’s not a big motivator for me. I’m not going to run a marathon but I can do a little exercise of running around the block.”

One way to encourage savings might be to let your bank automatically transfer a portion of each paycheck to savings each month or commit to putting 10 percent of every check you cash into savings.

“It takes some courage to save $20 a month or $15 dollars a month, but then as you do that you say, ‘I have the capability to save twenty dollars a month, maybe now I could move it up to $25 or $35.'”

Heather Brown