David Bach The Automatic Millionaire

If there's anything you can count on, it's change. Stuff happens. People lose their jobs, their health, or their spouses. The economy can go sour. The stock market can drop. Businesses can go bankrupt.

I'm not being negative -- just realistic.

One way to prepare for change is to build a rainy day fund -- an emergency account designed to get you through unexpected times. With a rainy day fund, you don't have to raid your retirement account or run up your credit cards when you hit a bump in the road.

And setting up a rainy day fund is easier than you think. Just follow these four easy steps and enjoy the peace of mind that's sure to follow.

1. Take Stock of Your Expenses

First, you'll need to know how much money you spend each month. So grab a pen and paper and start listing. Be sure to include rent/mortgage, utilities, credit card payments, groceries, gas, and entertainment costs.

Add the costs together and multiply the sum by three. This tells you how much money you need to get by for three months. This is the minimum amount you should have in your rainy day fund. Should you try to save more? Absolutely, but three months is a good place to start.

Now, write down how much money you've already saved. If it's less than your goal amount, keep reading.

2. Automate Your Contributions

The truth is that you probably won't save for an emergency if you don't do it automatically. So make it easy on yourself. Work out an arrangement with your employer so that part of your paycheck goes into your rainy day fund every time you get paid. It can be as little as $25.

Or set up a recurring transfer through your online banking account. With this option, the funds are automatically taken out of your regular checking or savings account and deposited into your rainy day fund.

If you don't have an online banking account, consider using a site like PayTrust.com, StatusFactory.com, or Quicken.com.

3. Keep Your Emergency Fund Separate

The main reason most people don't have any emergency money is because they have what they think is an emergency every month. If your emergency fund is attached to your checking account or an ATM card, chances are you'll use the money to pay for things that aren't real emergencies -- a new dress for that special party, a broken dishwasher, or the latest golf club that's on sale!

Be honest with yourself. You know what a real emergency is. It's something that threatens your survival -- not your comfort zone. It's a true need, not a want.

Keeping your emergency fund separate will help you think twice before dipping into your rainy day fund.

4. Get the Best Interest Rate You Can Find

Not earning interest on your emergency money is almost as bad as burying it in your backyard.

True, for the past few years it's been hard to make money off your savings, because interest rates were less than 1 percent. But, rates are climbing again.

And, more good news: Online banks are offering very competitive interest rates to attract customers. At the time this article was written, two of the highest yielding savings accounts were being offered by ING Direct (3.4 percent) and Emigrant Direct (4 percent). These rates are up to four times the national average! And both accounts are FDIC-insured, have no fees, no service charges, and no required minimums.

Online banks can offer high rates because they don't have the expenses of brick and mortar banks. The competition is fierce, which is more good news for you. As national banks lose customers to online banks, they too are starting to offer better rates.

If you don't want to leave your current bank, ask them for a better deal. I was considering moving my money to an online bank. When I discussed this with my national bank, they told me they now offered a more competitive savings account. By asking, I went from earning .75 percent to 3.5 percent!

Know what's available so you can ask for more. Great deals are listed at Bankrate, Lower My Bills, and Interest Rate News.

Also, consider U.S. savings bonds. The government's Treasury Direct website provides an incredibly easy way to invest as little as $25 a month automatically in two types of U.S. savings bonds, I-Bonds and EE Bonds, otherwise known as Inflation Bonds and Patriot Bonds. Through October, I-Bonds paid 4.8 percent and EE Bonds, 3.5 percent. The downside (which may actually be an upside) is that you tie your money up for a longer period of time than with online savings accounts. If you sell your government bonds before five years, you pay a penalty fee of three months' interest.

For as little as $25 a paycheck, you can move beyond living paycheck to paycheck, more readily handle the unexpected emergencies life throws your way, and sleep better at night. Now, that's a sound investment.