An emergency fund, also known as a contingency fund,[1] is a personal budget set aside as a financial safety net for future mishaps or unexpected expenses. A critical part of financial planning, it is supposed to ensure one's personal finances are prepared for any emergency so that the risks of becoming dependent on credit, falling into debt, or running out of money in general are reduced if such a situation were to occur.
Emergency funds may be used in the case of job loss, medical emergencies, automobile problems, home appliance repairs and replacements, and unplanned travel expenses.[2]
See also
References
- ^ "Emergency Fund - Economic Times".
- ^ Daniel, Kurt. "Emergency fund". Investopedia.