When they happen, emergencies tend to show up unannounced. An emergency fund can be a vital part of your safety net so that a sudden medical bill, urgent home repair or job loss doesn’t harm your financial stability.

Key Takeaways:

  • An emergency fund is an account dedicated to covering unexpected urgent expenses.
  • Even common emergencies, such as a medical bill or pressing home repairs, can cost thousands of dollars. An emergency fund can help you avoid borrowing money in these situations.
  • If you don’t already have an emergency fund, consider starting one right away and funding it before other nonessential financial goals.
  • A good rule of thumb is to save between three and nine months of living expenses, depending on your personal situation.
  • Keeping your emergency savings in a dedicated account, funding it with direct deposit and avoiding tapping it for nonemergencies can help it grow.

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