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1.
An advantage to using an automatic savings account to build an emergency fund is that it _______.
Saves you time and energy on finding money to save. Putting your saving on automatic can free up time for other financial planning.
2.
You will likely need an emergency fund most when you're not financially stable.
True. People who are just starting out are usually most in need of such a fund.
3.
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.
4.
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.
5.
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.
