Emergency Fund
Savings buffer of 3-6 months of expenses for unexpected costs and financial security.
What You Need to Know
An emergency fund is your financial safety net—money set aside specifically for unexpected expenses like job loss, medical bills, or major repairs. It prevents you from going into debt when life happens.
How Much to Save:
- 3 months: Minimum for stable income, low expenses
- 6 months: Recommended for most people
- 9-12 months: For irregular income, single income families, or high-risk jobs
Where to Keep It:
- High-yield savings account (2-4% APY)
- Money market account
- Short-term CDs
- Not in stocks or risky investments
What Counts as an Emergency: ✅ Job loss, medical bills, car repairs, home repairs ❌ Vacation, new furniture, holiday gifts, "good deals"
Wedding Connection: Building an emergency fund before major expenses like weddings prevents you from financing everything on credit cards. It's your foundation for financial security.
Sources & References
This information is sourced from authoritative government and academic institutions:
- consumerfinance.gov
https://www.consumerfinance.gov/start-small-save-up/
Related Calculators & Tools
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50/30/20 Rule
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Analysis Paralysis
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Automated Savings
Setting up automatic transfers so saving happens without willpower.
Behavioral Finance
The study of how emotions and mental shortcuts influence money decisions.
Budget
A spending plan that tracks income and expenses to ensure you're living within your means and working toward financial goals.