Emergency Fund
Savings held in a safe, quickly reachable account to absorb unplanned costs such as job loss, illness, or a sudden repair.
An emergency fund is defined by its purpose, not its size. Its job is to turn a bad month into an inconvenience.
Often confused with
- Financial Goal
- A goal funds something you chose; an emergency fund funds something you did not.
- Investment
- An emergency fund is held safe and liquid for the worst day; an investment accepts risk in exchange for a higher expected return.
Taught in
See also
3.1.A.2 · 5.1.C.6 · 5.2.C.3