A small emergency fund refers to a modest amount of savings that is set aside specifically for unexpected or unforeseen expenses. The purpose of this fund is to provide financial security and peace of mind, knowing that there are resources available in case of an emergency such as a sudden job loss, medical expense, or car repair. A small emergency fund typically ranges from $500-$1,000, but can be larger depending on individual circumstances and financial goals. The idea is to have enough money saved to cover essential living expenses for a short period of time until the situation can be resolved.