Everyday money · General financial education

Emergency fund

An emergency fund is money for unexpected expenses. You can access it without selling investments or borrowing.

In more detail

A cash reserve keeps money available for surprises. Its size depends on essential expenses, income stability and commitments. A number of expense months that you choose can help you plan.

Background

Separate planned expenses from unexpected liquidity needs. A buffer has opportunity costs but reduces the chance of having to sell investments at a bad time. Its size is a planning assumption, not a universal rule.

An example

With essential expenses of €1,500 and a chosen target of 4 months, the reserve is €6,000.

A common misconception

An emergency fund must be a set number of months that applies to everyone.

The size is your own planning assumption. Access matters, not a universal monthly rule.

Source: Investor.gov · Introduction to Investing. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.