Your emergency fund will come in handy when you have to deal with a surprise expense, like when your water pipes leak, and you need to call a plumber to fix them, or when your refrigerator stops working, and you need to get a replacement. Your emergency fund should have enough savings to cover these expenses at a moment’s notice without disrupting your monthly budget.
Your emergency fund can do more than help you cover surprise expenses right away. It can also help you stay afloat in times of distress when your regular source of income is not enough — or worse, when it’s not there at all.
Another thing that an emergency fund can do is reduce your financial anxiety and give you peace of mind in your day-to-day life. You don’t have to worry about whether small or big emergencies will turn your finances upside down.