An emergency fund is your financial safety net, designed to cover unexpected expenses without derailing your budget or forcing you into debt. In this lesson, we'll explore how to calculate, build, and maintain an emergency fund that gives you peace of mind.
Most financial experts recommend saving 3-6 months of living expenses in your emergency fund. However, the exact amount depends on your job security, family situation, and risk tolerance.
Start by listing all your essential monthly expenses:
Save $100-200 per month consistently
Save $500-750 per month
Save $1,000+ per month
Test your understanding by selecting the best response to each emergency scenario:
Emergency fund = 3-6 months of expenses
Keep emergency fund in high-yield savings account