The unexpected happens to everyone

The unexpected

The unexpected happens to everyone. Things like car trouble, family emergencies, and trips to the vet are unfortunate, but they happen.

These situations can crush your budget and put you in a hole – unless you’re prepared. That’s where an emergency fund comes into play.

By definition: An emergency fund is money you set aside to cover the financial surprises life throws your way. 

How much should a fund be? There are essentially three ways to build an emergency fund:

  • Make more money.
  • Spend less money.
  • Or do both.

Bottom line: Your emergency fund should be big enough to cover six months of essential expenses. 

Recently, Suze Orman said that not having an emergency fund can lead to one of the biggest money mistakes.

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