Hurricane Sandy isn’t just a natural disaster; it’s a financial disaster, too. Current estimates predict the superstorm will ultimately cost the country tens of billions of dollars. But that big, big number represents its total damage to the nation. What matters more is how much financial damage the storm does to you. When disaster strikes, many people count on insurance to bail them out. Insurance is important, no question, but it’s also important to remember that nobody cares more about your money than you do. Ultimately, you are responsible for protecting your family’s financial well-being. One of the best ways to do this is through self-insurance, by building a substantial emergency fund. (PHOTOS: The Toil After the Storm: Life in Sandy’s Wake) An emergency fund — or “rainy-day account” or “safe and sound money” or whatever you’d like to call it — is a chunk of change set aside specifically for the unexpected things life throws your way. It’s not to be used to buy a new car. It’s not to be used for a vacation to Paris. It’s not to be used to remodel your bathroom. It’s for use only in case of emergency: a tree falls on your house, your youngest daughter breaks her arm, you lose your job. (MORE: Who’s Better for Markets: Romney or Obama?) Though personal finance experts agree emergency funds are necessary, there’s no consensus on how much is enough. Liz Weston, for instance, has argued that for many people a zero-dollar emergency fund makes sense. (Instead, she says, emergencies can be handled by credit card.) Others, such as Suze Orman, advocate stashing aside up to eight months of living expenses. My own advice is to do what works for you. Start small. If you don’t currently have a rainy-day fund, then something is better than nothing. Set aside $500. Or $100. Or $20. Over time, work to build this buffer until you have $1000 or $5000 on hand for catastrophe. Ultimately, you’ll sleep more soundly if you do have six to twelve months of … Continue reading Start an Emergency Fund to Prepare for Financial Emergencies