In Jane Bryant Quinn's book she recommends a Cushion Fund (a.k.a. Emergency Fund) of 3 months living expenses. This amount should include mortgage, groceries, car payment, gasoline, phone, utilities, insurance, minimum CC payments, health insurance, etc. Whatever bills you pay monthly should be figured into the amount you will need for 3 months.
She recommends not mixing this money in with other savings such as gifts, vacations, etc. because it's too easy to dip into.
Build up the cushion with automatic deposits from your checking account and any other bonuses or gifts you get.
She says for your own safety to build this account as fast as you can. If you have to tap into it, refill it as quickly as possible. This money should be kept in either a bank money-market deposit account or a money-market mutual fund.
I am doing this with my new account with Amboy. I am depositing $20 minimum into it each week. I would like to make it more, but until the kitchen addition is done I don't dare go over that amount. I want the addition paid for without adding to the CC debt.