Definition
Emergency Fund
Cash set aside to cover surprise expenses without going into debt.
An emergency fund is money kept in an accessible account to cover the unexpected: a car repair, a medical bill, or a stretch without income. It turns a financial crisis into a minor inconvenience.
A common target is three to six months of essential expenses, though a $1,000 starter fund is the right first milestone. Keep it in a separate high-yield savings account, not invested, so it is whole on your worst day.