An emergency fund is like an immune system for your financial health. We have germs circulating all around our environment, but if they try to attack us our immune system springs into action to protect us and keep us healthy. If we do not have a healthy, robust immune system those same viruses and bacteria can wreak havoc, make us very sick and possibly even kill us.
And that is what your emergency fund does for your financial health. There are financial “disasters” lurking everywhere around us, just waiting to happen (an appliance goes on the fritz, the roof springs a leak, your car breaks down, your computer dies, you lose your job, etc.) If you do not have that healthy emergency fund to cover the expense, it will derail your finances, can force you to reach for the credit card (or take out a loan), and put you in debt.
Now you are scrambling to not only cover your regular monthly expenses but also to pay back that debt and paying interest on top of that. You can see how, without an emergency fund, one setback can lead you down into a negative financial spiral that can take a very long time to climb out from.
If you do have an emergency fund, you simply use that money to cover your expense and continue on. No panic, no interest payments to deal with. And if your budget already included a small amount going into your emergency fund each month, not even any difference to your monthly expenditures.
So, hopefully, this illustrates to you just how important an emergency fund is to your financial health!
Best of luck to you for creating your own healthy financial situation that can lead you to a very bright future
For how to save up an emergency fund and more on emergency funds see What are Your Emergency Fund Questions?