What can result from not having an emergency fund?

Not having an emergency fund can lead to dependence on high-interest loans or credit cards. An emergency fund serves as a financial safety net, allowing individuals to cover unforeseen expenses, such as medical emergencies, car repairs, or sudden job loss, without relying on debt. In situations where unexpected costs arise and individuals do not have savings to draw upon, they may resort to using credit cards or taking out loans to meet their financial obligations. This often results in accumulating high-interest debt, which can become difficult to manage and lead to a cycle of financial instability. Having an emergency fund helps avoid this scenario by providing immediate access to cash when needed, thus reducing the likelihood of turning to high-interest borrowing options.