An emergency fund is your financial safety net, protecting you from unexpected setbacks like medical bills, car repairs, or job loss. Here’s why it’s essential:
- How much to save: Experts recommend 3–6 months’ worth of living expenses. Start with a smaller goal (e.g., $1,000) if you’re just beginning.
- Where to keep it: Use a high-yield savings account—it’s easily accessible and earns more interest than a regular checking account.
- How to build it: Automate monthly transfers, cut non-essential spending (e.g., subscriptions), or redirect windfalls (like tax refunds).
Without an emergency fund, you might rely on credit cards or loans, digging yourself deeper into debt. Start small, stay consistent, and watch your financial resilience grow.