An emergency fund is a savings reserve set aside for unexpected costs, such as home repairs or medical bills. Estimating the size of an emergency fund depends on personal circumstances, job security, and expected short-term expenses.
Experts recommend saving at least 3 to 6 months of living expenses in your emergency fund. Some individuals may need a larger emergency fund, depending on factors such as job stability, expected expenses, and risk tolerance. A balance can be achieved between building an emergency. fund and paying off debt by developing an effective budget.