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Emergency funds are an essential part of managing a household. Ensuring that you’ve got savings tucked away in case of a car accident, injury, pet emergency, or other crisis can really provide peace of mind and help you recover faster from those unexpected disasters.

What’s an Emergency Fund, and Why Do You Need One?

Emergency funds are essentially a financial safety net — money that you’ve put away to deal with any unexpected or emergency expenses that crop up. Things such as unexpected car repairs, vet bills, medical bills, or even a loss of income can be prepared for with an adequate emergency fund.

Experts refer to a sudden expense as a “financial shock” and recovering from these without savings can be an uphill battle. Without adequate savings, you might have to fall back on loans or credit, which can be harder to pay off and have a lasting impact on your financial future.

Building a Good Emergency Fund

Experts usually say you should have at least three months of household income in your emergency fund, but that number can feel daunting if you’re living paycheck to paycheck. The truth is that having even a small safety net can really make a difference in emergency situations, so saving even a little bit every month can help you be prepared.

Saving money for anything generally comes down to one factor: habit. Putting away a consistent amount of money on a consistent schedule can really help you keep on track with your savings. Manage your cash flow and keep track of your savings and spending with a budget to make sure that you have your finances under control.

Another good strategy is to take advantage of occasional opportunities to save extra money. Times of year that you get an influx of cash can help you boost your emergency fund, so putting away a portion of your tax refund, holiday gifts, or other windfalls is a good practice to adopt.