What is an emergency fund and why it matters?

What is an emergency fund and why it matters?

An emergency fund is a bank account with money set aside for unforeseen medical expenses or unexpected repair or replacement.

Emergency expenses can result in a financial crunch. That's where an emergency fund comes into use.

It helps you stay afloat in your time of need without having to rely on credit cards or high-interest loans.

It is particularly important to have an emergency fund if you have debt because it can help you avoid additional borrowing.

You can start by setting a small amount of money like $500 aside in your emergency fund.

Keep a monthly savings goal to maintain the habit of saving on a regular basis.

You can put your emergency fund in a savings account with a high-interest rate.

A high-yield savings account is also a good platform where you can keep your emergency fund.