An emergency fund is money that is set aside for unplanned circumstances and situations. This money is basically for things that can happen without having a budget for them. These situations can include sicknesses, a sudden car breakdown, unplanned maintenance of household items, etc. Emergency funds are purely for emergency situations as the name implies.
We are living in a world of uncertainties and it is important we plan for such situations so that it doesn’t take us unaware. When you have this emergency fund set aside, it gives you some peace of mind and you would not be worried when you find yourself in any emergency situation financially.