Article

How strong is your safety net?

An emergency fund can be your first line of defense against the unexpected

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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