How can emergency funds protect against financial uncertainty?

Emergency funds are savings set aside for unforeseen expenses, such as medical emergencies, job loss, or urgent repairs. They act as a financial buffer, preventing the need to rely on credit or loans in crises.

Key Facts

• Purpose: Designed to cover 3-6 months of living expenses.
• Accessibility: Should be kept in a liquid account for easy access.
• Growth: Recommended to use high-yield savings accounts for better interest.
• Foundation: A crucial element of personal finance and budgeting.

Examples or Use Cases

• Job Loss: Covers expenses while seeking new employment.
• Medical Emergencies: Funds for unexpected medical bills.

FAQs

How much should I save in my emergency fund? Aim for at least 3-6 months' worth of living expenses.

Where should I keep my emergency fund? Consider a high-yield savings account for easy access and interest growth.