An emergency fund is a savings account set aside specifically for unexpected expenses. It is typically recommended to have three to six months’ worth of living expenses saved in an emergency fund.

Having an emergency fund provides peace of mind and financial security. It allows you to handle unexpected expenses, such as medical bills or car repairs, without going into debt or sacrificing other financial goals. It also provides a safety net in the event of a job loss or other financial hardship.

It is recommended to have three to six months’ worth of living expenses saved in an emergency fund. This amount will vary depending on individual circumstances, such as job stability and family size.

An emergency fund should be kept in a separate savings account that is easily accessible in case of an emergency. It should not be invested in stocks or other high-risk assets, as the goal is to have the money readily available when needed.

To start building an emergency fund, set a savings goal and create a budget that includes regular contributions to the fund. Look for ways to cut expenses and increase income to free up more money to put towards the fund. It may take time to reach the savings goal, but even small contributions can add up over time.