Member-only story
What Is an Emergency Fund?
Money stashed away for emergencies
You will never know when certain events will occur. That is why it is important to have an emergency fund. An emergency fund is a pool of money you stash away in a dedicated savings account to cover unexpected expenses. These expenses could include car repairs, medical bills, or unexpected job loss. The following will explain the importance of an emergency fund and how to set yourself up with one.
Why is an Emergency Fund Important?
An emergency fund is essential for several reasons. First, it provides a safety net in case of unexpected expenses. If you don’t have an emergency fund, you may be forced to rely on credit cards or loans to cover unexpected expenses. This can lead to high levels of debt and financial stress.
Second, an emergency fund provides peace of mind. Knowing you have money for unexpected expenses can help reduce financial anxiety and stress. It can also help you feel more in control of your finances.
Finally, an emergency fund can help you avoid dipping into your primary savings and long-term investments. You do not want to significantly set yourself back in terms of your long-term financial goals.
How to Start an Emergency Fund
