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Detailed explanation-1: -To Pay Bills When You’ve Lost Some or All Your Income “If there is no income coming in from work, you may need to tap the emergency fund to cover necessary living expenses, like housing, groceries, and utility bills, ” Lee says.

Detailed explanation-2: -An emergency fund is a separate savings or bank account used to cover or offset the expense of an unforeseen situation. It shouldn’t be considered a nest egg or calculated as part of a long-term savings plan for college tuition, a new car, or a vacation.

Detailed explanation-3: -A common guideline for emergency savings is to set aside enough for three to six months’ worth of expenses. But you might choose to save nine to 12 months’ worth of expenses if you’re worried about a prolonged emergency draining your savings.

Detailed explanation-4: -As a rule of thumb, we recommend that working clients hold 3 to 6 months’ worth of living expenses in cash as emergency savings. Having at least 3 months’ worth of living expenses in savings will enable you to weather unexpected situations with more ease.