An emergency fund is preparedness. An emergency fund is money set aside for unplanned events like job loss, illness, major car or home repair outside of normal planned expenses like home or car maintenance.
The general recommendation for an emergency fund is to have 3 months to 12 months of saving in cash, in a high yield savings account depending on your responsibilities and job security. Lately we’ve been hearing about more people aiming for 6 months to year, as people in higher paying jobs tend to take longer to find a new job they like and there is more peace of mind in uncertain times.
We’ve heard the best practice is to keep the money at a different bank. Out of site of mind. An emergency fund is like buying peace of mind and a sense of security.