Having an emergency fund can help you avoid financial hardships during unexpected events, such as job loss, medical expenses, or car repairs. It can provide you with a safety net to cover your expenses without having to rely on credit cards or loans, which can lead to debt and financial stress.

The general rule of thumb is to save at least three to six months’ worth of living expenses in your emergency fund. However, if you have a high-risk job or a family to support, you may want to save more.

There are many ways to save money on a tight budget, such as:

• Trimming your expenses by canceling subscriptions, negotiating bills, or buying generic brands
• Selling items you no longer need or use, such as clothes, books, or electronics
• Participating in online surveys, focus groups, or product testing to earn extra cash
• Starting a side hustle, such as freelancing, pet sitting, or house cleaning
• Couponing, using cashback apps, or shopping at thrift stores to save money on groceries and household items

To avoid spending your emergency fund on non-emergency expenses, you can:

• Open a separate savings account for your emergency fund, and don’t link it to your checking account or debit card
• Set a clear definition of what constitutes an emergency and stick to it
• Track your expenses and budget carefully to avoid overspending
• Consider setting up automatic savings transfers from your paycheck or checking account to your emergency fund

You should review and adjust your emergency fund at least once a year, or whenever your financial situation changes significantly, such as a job loss, a raise, or a move. You may need to increase or decrease your savings based on your current expenses, income, and goals.