An emergency fund is cash you set aside for unexpected expenses like job loss, medical bills, or car repairs. It keeps you from going into debt when life surprises you.
A common rule of thumb is three to six months of essential expenses. If your job is stable, three months may be enough. If your income is irregular, aim for six months or more.
Keep your emergency fund in a safe, accessible place such as a high-yield savings account. It should be easy to reach but separate from your daily spending account.