ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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“To save money for college for the next five years”
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“To pay off credit card bills in 12 months”
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“To invest in an international mutual fund for retirement”
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“To establish an emergency fund of $4, 000 in 18 months”
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Detailed explanation-1: -An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include car repairs, home repairs, medical bills, or a loss of income.
Detailed explanation-2: -Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months’ worth of living expenses.
Detailed explanation-3: -It’s all about your personal expenses If your monthly essentials come to $2, 500 a month, and you’re comfortable with a four-month emergency fund, then you should be set with a $10, 000 savings account balance.
Detailed explanation-4: -The rule of thumb is that individuals should have enough in an emergency fund to cover three to six months of living expenses. Add up essential living expenses for one month and multiply that amount by either three or six (this will depend on how much you’re most comfortable having in case of emergency).