The short version
- It is for true surprises, not planned costs.
- Many people start with a small target and grow it.
- Easy to reach, but not too easy to spend.
What it is for
Unexpected costs such as a car repair, a medical bill or a gap in income. Planned costs belong in your regular budget.
Thinking about size
Common guidance talks about a few months of essential costs. Many people find it helpful to start with a smaller first target and build from there.
Where people keep it
Often in a separate savings account at a bank or credit union, so it is easy to reach but kept apart from spending money.
Rebuilding after use
If you use it, that is what it is for. Add a line to your budget to rebuild it over time.
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