Have you ever heard or wondered to yourself, why have an emergency fund? Isn't it a large sum of cash just sitting in a bank account not working for me? That's very inefficient!
Those things are true, it is a large sum of cash in a savings account. It is also not working as hard as other investments could be for you. However, let's think about what an emergency fund represents more than what it is.
First, I'd like to ask you about the roof of your house or apartment. When you are outside, enjoying a beautiful day or out working, what is that roof doing for you? It doesn't follow you around. It's not earning you extra money while you aren't there, nor is it doing so while you sleep. Do you consider your roof inefficient or not useful to you for what it is?
I suspect you don't. I suspect you are grateful to have that roof available to you when you come home. Having that security and sense of belonging is worth more than any extra work the roof could be doing for you, is it not?
Your emergency fund is very similar. You can think of it as a roof over your money house. It holds the walls together and protects your money house from the economic storms of life. It's purpose is not to earn you money or be efficient. It's purpose is to protect and secure you against unexpected emergencies. Just like the roof on your house protects against sudden rain and wind storms, your emergency fund protects you against sudden job loss or large expenses.
I believe the idea that your emergency fund should be "working" for you isn't quite right. Instead, I encourage you to look at it as protection for your money home. Keeping it safe, just like the roof on your dwelling does.