What are emergency funds for?
An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. These unexpected events can be stressful and costly.
Here are some of the top emergencies people face:
- Job loss.
- Medical or dental emergency.
- Unexpected home repairs.
- Car troubles.
- Unplanned travel expenses.
3 benefits of having emergency money
Aside from financial stability, there are other pros to having an emergency reserve of cash.
Get the basics on emergency funds
Here are the answers to some top questions about emergency funds.
In a nutshell, you should have at least 3 to 6 months' worth of expenses—but the exact amount depends on a few variables.
Because your overall financial picture has many moving parts, it's important to see how your emergency fund fits in with the rest of your priorities.
Money market funds can be a great place to hold your emergency savings because they're safe and accessible.
Money market fund
A mutual fund that invests in very-short-term securities. Because they tend to have stable share prices and a relatively low rate of return, money market funds are often used for the cash portion of a portfolio or for holding money you'll need soon.
All investing is subject to risk, including the possible loss of the money you invest.