ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Save money for college for the next four years
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pay off credit card bills for the next 6 months
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invest in a 401k for retirement
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establish an emergency fund of $2, 000 in 5 months
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Detailed explanation-1: -What is an emergency fund? 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: -While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months’ worth of expenses.
Detailed explanation-3: -Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months’ worth of living expenses. Start by estimating your costs for critical expenses, such as: Housing. Food.
Detailed explanation-4: -Set several smaller savings goals, rather than one large one. Set yourself up for success from the start. Start with small, regular contributions. Automate your savings. Don’t increase monthly spending or open new credit cards. Don’t over-save.