Mistake #1: You haven't saved enough
Having three to six months' worth of nondiscretionary expenses saved in an emergency account is a good rule of thumb. However, the right amount is different for everyone depending on their financial circumstances. If you are secure in your job and don't have dependents, you likely need less emergency savings than if you have children or an unpredictable income.
Remember, you don't need three to six months of all your expenses, just “must-haves” such as your mortgage or rent, utilities, taxes and insurance bills. Whatever you're spending now on discretionary items like dinners out, vacations and shopping, you could eliminate in a real emergency. Once you've set aside enough cash, redirect your savings to longer-term goals such as retirement or a home down payment.
Mistake #2: Your money is in risky investments
The stock market is not the place for your emergency money. Instead, keep it in a liquid, easily accessible place such as a savings or money market account, or invest in a conservative investment such as a stable value fund. Sure, you won't earn much of a return on your money, but you can easily tap into it when needed, and there's little risk that the account will lose value. Remember, this fund is designed to support you in a worst-case scenario, not to save for the long term.