ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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You lose your job but still have bills to pay
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Your friends want to go out to eat
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Your favorite artist releases a new album and you just have to buy it
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Your friends are going on an expensive trip an you would like to go with them
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Detailed explanation-1: -Living expenses after a job loss or pay cut. Major car repairs after an accident. Emergency home repairs. Emergency, necessary medical expenses.
Detailed explanation-2: -To Pay Bills When You’ve Lost Some or All Your Income “If there is no income coming in from work, you may need to tap the emergency fund to cover necessary living expenses, like housing, groceries, and utility bills, ” Lee says.
Detailed explanation-3: -Try to avoid using your savings on nonessential items and services, such as a vacation or entertainment expenses. Here’s a good barometer: Consider whether you actually need something to survive. If not, think twice before using emergency fund money for the purchase.
Detailed explanation-4: -Why do I need an emergency fund? Emergency funds create a financial buffer that can keep you afloat in a time of need without having to rely on credit cards or high-interest loans. It can be especially important to have an emergency fund if you have debt, because it can help you avoid borrowing more.
Detailed explanation-5: -It’s best to keep your emergency fund separate from your other bank accounts. You want your emergency fund to be accessible in case you need to access it quickly-but not so convenient that you’re tempted to dip into it unnecessarily. You want to have a “set it and forget it” mentality when it comes to this account.