An emergency fund is money set aside to cover unexpected expenses or financial emergencies. It provides a safety net so you don’t have to rely on credit cards or loans when surprises happen.
What It Covers
- Job loss: Helps pay living expenses while you search for new work.
- Unexpected bills: Covers costs like car repairs, medical bills, or urgent home fixes.
- Other emergencies: Protects you from going into debt when life throws a curveball.
How Much to Save
Most experts recommend saving 3 to 6 months’ worth of essential expenses. The exact amount depends on your job stability, family situation, and comfort level with risk.
Final Thoughts
An emergency fund provides peace of mind and financial security. It should be kept in a safe, easily accessible account like a savings account or HISA.