Wendi Pendleton was living pretty much paycheck to paycheck when she read one of my columns telling people they need $500 in the bank.

Having a big emergency fund is great, I wrote, but all you need to get started on a better financial future is a $500 pad. That's enough to avoid bounce fees, steer clear of payday lenders and cover most minor emergencies so you don't have to add to your credit card debt.

"I decided it was solid advice and trimmed my spending that month and saved $500," Wendi wrote me. "Realizing how much money I wasted, I saved another $500 the next month, and so on."

Some months she saved even more. Unexpected dental work and a car repair, events that would have stressed her out in the past, didn't derail her.

"I now have $12,000 in savings I am using as a down payment on my first house, something I never thought would be possible for me on my own," Wendi wrote from Riverside, Calif. "Thank you. You changed the way I looked at my money and spending, and improved the quality of my life."

Most of the talk about financial cushions centers on the importance of an emergency fund, that stash of cash that's supposed to equal three to six months' worth of expenses. As I wrote in "The $0 emergency fund," though, that's an awfully tough standard for most families to meet.

A $500 pad, by contrast, is something that just about everyone can scrape together with enough determination. And it can change your life.

3 steps to a $500 cushion

1. Start by keeping an extra $100 in your checking account. If you maintain this pad and resist the urge to spend it, you'll greatly reduce your chances of bouncing a check. (You also should sign up for overdraft protection, to minimize the damage if you do accidentally write a check that's too big for your balance.)

Some posters on the Your Money message board — the ones who actually balance their checkbooks — write themselves phony checks for their "pad" amount to keep them from spending it. If you keep track of your balance online or via an ATM, you'll have to mentally deduct the $100.

2. Then funnel $400 into your savings account. It may not seem like much, but $400 will cover a good chunk of the real emergencies that come your way, from car repairs to insurance deductibles to replacing an appliance that breaks down. Even if an unexpected expense is higher than $400, you'll at least reduce the amount you need to scrape up from other sources.

3. Then leave it alone unless you're facing a real emergency. If you're in credit card debt or owe money to payday lenders, you must get out of the habit of looking for a quick fix when you encounter unexpected expenses.

The pain of taking money out of savings may help you look for alternatives to spending the cash. If the spending is absolutely necessary, you're better off paying cash than paying interest on money borrowed from credit cards or payday lenders. Then you can concentrate on rebuilding your cushion as soon as possible.

U.S. households with less than $500 in the bank

Age group	Percentage
Under 35	34.5%
35-44	25.1%
45-54	22.1%
55-64	19.0%
65-74	18.8%
75 and over	14.9%
Source: Federal Reserve Board's 2004 Survey of Consumer Finances

The first $500 is the hardest

Eventually, you should try to build your pad of cash into a real emergency fund, although that can come after you've taken care of more-pressing financial needs, such as paying off high-rate debt and saving for retirement.

Here are some ideas for scraping up the initial $500:

• Use your tax refund. The typical refund check is more than $2,000, so most people will have enough to fund their cushion in one fell swoop. If you're not getting a refund or it's already spent, though, you still have plenty of options.

• Try a "buy nothing" month. Several dozen posters on the Your Money message board have tried this experiment, and many are surprised at the amounts of cash they're saving by buying only necessities for a single month. If you bring your lunch and snacks to work, don't eat out and avoid shopping for 30 days, you may find you can make a good deal of progress toward your $500 goal.

• Sell stuff. Try yard sales, consignment stores and online auction sites such as eBay or classified sites like Craigslist. Sell your books on Half.com or Amazon.com. Make sure the cash you raise is put into savings immediately, or it will get spent.

• Save your change. Several readers tell of saving hundreds of dollars over the course of a year, even making a game of it with their children.

• Review your bills. If you haven't already, go through your regular bills and see what you can trim. Dropping premium TV channels or doing without pay TV entirely for a while could produce significant savings. Phone bills are often rife with extras that can be cut, including call waiting or pricey voice-mail systems. If you have high-speed Internet access, consider switching to an Internet calling service such as Vonage or Skype to save even more.Once you've trimmed, channel the extra savings into your bank account. If you save $10 on your phone bill, for example, put that much into savings each month.

• Make your savings automatic. Setting up a regular electronic transfer from your checking to your savings account is much better than making the transfers manually. If you have to make the decision to save every month, you'll probably decide to do something else with the money. If the decision is made for you, it's more likely to stick.

But is it an emergency?

If you've been living paycheck to paycheck for a while, you may be unclear about what constitutes a true emergency. Essentially, it's an event that puts your livelihood or your family's safety at risk.

The television dying, for example, is not an emergency. The furnace dying is.

A car repair may or may not be an emergency, depending on whether you have alternate transportation. If you can't get to work any other way, then getting the car fixed justifies raiding your emergency fund. If you can take the bus for a while, it doesn't.

Regular, predictable expenses are not emergencies. Neither are gift-giving occasions such as weddings, holidays and birthdays.

Having trouble finding the money? Or do you have tips to offer others about how to build a cushion?

Related Links:

Do one thing: Start an emergency fund

Where to turn for emergency cash

Do you have cash stashes?