It's simply just putting money into a checking or savings account that you use to cover unexpected expenses. The amount varies by your life situation and risk

It's simply just putting money into a checking or savings account that you use to cover unexpected expenses. The amount varies by your life situation and risk tolerance, but a couple months salary is a good start. Think of the sort of "adult expenses" your parents have - refrigerator failed and too expensive to repair, need to buy a new one - that will be $2,000, right now. My teeth need to be fixed - that will be $3,000. It's winter and the furnace broke - that will be $7,000. You want to be able to have the money on hand to deal with those situations. Those were not random examples - those are things that have come up for me in the last two years You probably shouldn't have more than a few hundred dollars in an emergency fund if you're paying off high interest loans (10%+)