Choose wisely. There is only one correct answer to each question.
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1.
A retirement account is not a good candidate to hold an emergency fund.
True. Retirement accounts require years to build up. When you take money out now, you can lose a lot of growth in future years.
2.
Where is the best place to keep an emergency cash fund?
Keep your emergency cash fund in a savings account or money market account. These types of accounts are the most accessible in case of an emergency.
3.
How much money should you keep in an emergency fund?
Your emergency fund should cover daily expenses for a period of three to six months at the minimum. If your income fluctuates, or if you're self-employed, you'd be wise to have more emergency cash on hand.
4.
When starting an emergency cash fund, it's always best to start with a high amount.
False. If you don't get a windfall, you can set aside a comfortable amount, such as 5%. You can always add to it later.
5.
Treating your emergency fund as a bill to be paid gives it an element of priority.
True. Usually, we can find money to pay our bills.
