While almost everyone will have unforeseen expenses from time to time, their effects can be mitigated with some upfront planning. By establishing an emergency fund, you can become more financially prepared to deal with the unexpected and won’t have to compromise other goals, such as saving for your retirement.

Typically, an emergency fund should cover three to six months of living expenses. If you find it easier to calculate a percentage of your salary, you may want to base it on 20% to 30% of your annual pretax earnings, keeping in mind that your account should always be tailored to your individual situation. For example, a realistic goal for a two-income household might be an account equal to 20% of combined salaries, since one wage earner may be able to cover basic expenses if the other becomes unemployed. On the other hand, a household that either relies on one income or has a fluctuating income might be more secure with an account equal to 30% of pretax salary.

If you need to access your reserves, you’ll want the money to be liquid and stable. A good investment vehicle for this type of account is a money market fund, which invests in short-term, high quality government and corporate debt. View your emergency fund as security for the short term, rather than as an investment in your long term portfolio. Personally, I have my emergency fund at an HSBC online savings account. Also, make sure that investing for your emergency fund doesn’t shortchange your other investment goals. And if you must tap this account, try to replenish it as soon as possible.

Here are some good and bads ways for bulking up that emergency fund.