I started saving for emergency fund even before having an idea of what it was about. To most people, the concept of an emergency fund is very intuitive. It is the money saved aside for emergency situations. This money has to be easily accessible and preferably immediately available, at all times. You do not want to wait for weeks to get a new refrigerator if the one you are using suddenly breaks down.
Realistically, for younger people, such as me now, or especially me 3 years ago, whatever money you save is your emergency money. Don’t even think about investing or stuff like that until you have at least 5k in your checking account. You want to have a strong buffer for job loss, property damage, etc. As you get older, the amount to have in your emergency fund increases, but when you first start making money, 5k should be decent.
Remember, money saved for a rainy day is supposed to be untouched until you have a serious NEED for it. Unexpected medical bill counts, job loss should count, but an iPhone 6 does not. The most effective way to save for an emergency fund is to put into a separate checking or savings account that you do not use for your normal bills and expenses. Set up a direct deposit for an amount on each paycheck to go directly to this account. If you put aside $200 per paycheck and you get paid twice a month, it takes about a year to reach 5k. Better yet, transfer the money left over each month to the emergency fund so you can get there faster. The sooner you get your rainy day fund adequately funded, the closer you’ll get to financial stability. And then we’ll talk about more advanced topics.
To read more on this topic, you can refer to this well-written article: