The meaning of mad money is and emergency fund of a small amount of cash that a person keeps around.
The saying mad money refers to if a person goes mad such as with dementia etc and needs assisted living then they would have mad money to put them in a home.
However you would need a lot more money now as mad money for going into assisted living or a care home.
However some people still keep a small sum of money at home or in their pocket or purse or wallet in case they need to make a small purchase or pay for something else that requires a little bit of money.
So if you have say $10.00 to $100.00 that could be considered mad money.
But any amount of money in your savings could also be considered to be mad money.
I just call my money that I save as an emergency savings.