No matter how careful you are, there are no guarantees that life will unfold according to plan. At any time you could face illness, job loss or just have to replace the transmission in the family minivan. Right after discovering the growing stain on your dining room ceiling.

The unexpected can happen at any time, which is why a rainy day fund is an important part of your budgeting process.

How much to save.

Most financial experts recommend having at least three months' salary saved as a safety net. If you feel your job might be at risk or you're self-employed, six months might be a better cushion. If you have other savings you could draw on in addition to your emergency fund, then you can adjust how much you need to put away. Or you may have family who can lend you the money. If you own a home, you might consider setting up a Home Equity Line of Credit for emergency use only.

Where to keep it.

Your emergency fund should be easily accessible, so it should be kept separate from your day-to-day operating account, perhaps in a High Interest Savings Accounts or Tax-Free Savings Account (TFSA). As a rule of thumb, you should try to fund your emergency account while still maintaining your other savings plans such as RRSPs.

Start small. And don't stop.

Depending on what you decide as an ideal buffer, make a commitment to squirrel something away either every pay period or in a lump sum at a particular time every month. It's okay to start small – the key is to begin. Treat it as a non-negotiable monthly "expense" and before long you'll have more than just emergency money saved; you'll have retirement money, vacation money or even a home downpayment.

An automatic plan makes saving painless.

A very easy way to manage your savings plan is to make it automatic. Set up a pre-authorized, automatic transfer into your savings account and then you won't even have to think about it. And when you need it, it will be there.