What is Emergency fund?
An emergency fund is cash set aside for costs you did not plan for and cannot put off, such as losing your job or an urgent repair. A common guideline is three to six months of essential expenses, kept in an easy-to-reach savings account rather than invested.
Why Emergency fund matters
It stops a surprise bill from landing on a credit card or forcing you to sell investments at a bad moment.
Related terms
Lessons that use this term
- How much should be in an emergency fund?
- How to start investing, step by step
- How much should I invest each month?