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What Is An Emergency Fund? Why Do We Need That?

In the year 2020, Covid 19 was the biggest disaster for humans. But at the same time, it was also a great teacher who taught us about many things. From washing hands regularly to saving money for future use & many more.

What is an emergency fund?

An emergency fund is a fund or amount of money which is kept or saved aside for the reason to be used in the future for unexpected emergency cases which may come up unexpectedly.

Why do we need an emergency fund?

An emergency fund is needed to overcome financially during an emergency or an extreme emergency. We humans cant know what is going to happen in the future, It may happen anything. As we saw during Covid 19, many people loosed their jobs, and many were stuck outside of their city. This is the case where an emergency fund plays an important role in our lives. Here are some cases where we need an emergency fund.

Medical or health emergency.

A medical or health emergency is a type of emergency that can come any time and without giving a single hint. A medical emergency is an unexpected situation that requires instant action. Some of the medical emergencies are:-

  • Accident
  • Cancer
  • Heart Attack Or Heart Diseases
  • Liver Diseases
  • Kidney Diseases
  • Flu

These are some diseases that need immediate action. If the action is not been taken in time then the patient may also die. And in this situation, if we are empty-handed then our emergency fund may come into use of it.

Job Loss

The best example of unemployment is covid 19. During Covid 19 million people suffered from job loss. We have to save funds for up to 6 months which can help us when we lose jobs unexpectedly.

Vehicle Repairs

Breaking down vehicles is still a problem for many workers. There are many places where the company doesn’t provide pickup and drop services to their employee. So many people choose to go buy bikes or cars. Sometimes our vehicles get broke and we shave to wait till the date of salary to repair our vehicles. This leads to low attendance in the office and also a salary deduction. Here if we have saved emergency funds then we would have repaired our vehicle.

Unplanned Travel

Traveling, there are many peoples who have hobbies of traveling but at the same time, there are many peoples who leave their city or village and moved to another for making money. While working in another city or village, if their family members meet with a serious incident then they have to immediately leave the workplace and ran for home town or village. In these cases, emergency money plays an important role.


The purpose of saving an emergency fund is that it gives you security. It helps you when you are out of money. Emergency funds give you the power to fight from fear of any unexpected emergencies.

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