People who’ve had large and unforeseen expenses arise can tell you how important having an emergency fund is. Having a cushion for those unexpected expenses such as medical expenses, home or car repairs can go a long way in helping you avoid new debt. These are especially important to people with low income or those living paycheck to paycheck. An emergency fund is essentially money that you have put aside to cover those unexpected expenses. Think of it as an insurance policy , rather than paying premiums to an insurance company, you’re setting aside money for yourself that can be used later. No matter what your income level is, make an effort to build an emergency account of at least $500-$1,000 in a savings account for those emergency situations.