What is an emergency fund and how does it help during a financial emergency?

An emergency fund is a savings account set aside specifically for unexpected expenses or financial emergencies. It serves as a safety net to help you cover unforeseen expenses without going into debt or having to dip into other savings. Having an emergency fund can help reduce financial stress and provide a sense of security knowing that you have a financial cushion to fall back on in times of need. The money in your emergency fund can be used for things like unexpected medical expenses, home repairs, car repairs, job loss, or other emergencies.