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Introduction to Building an Emergency Fund

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Life throws lots of surprises at you, many of them financial: the refrigerator dies, the radiator on the car goes out, we get a surprise tax bill, or a job is terminated. This is why it's important to have set aside a certain amount of cash for unforeseen occurrences. Doing so can buy you peace of mind while sacrificing spending for the short term.

What you will learn

  • What Is an Emergency Fund?
  • Where to Keep Your Emergency Fund
  • Finding Money to Save for an Emergency Fund

What do you know?

Introduction to Building an Emergency Fund

Life throws lots of surprises at you, many of them financial: the refrigerator dies, the radiator on the car goes out, we get a surprise tax bill, or a job is terminated. If you lack an emergency fund there are other options, including credit cards, payday loans, pawnshop loans or loans from family members or friends. Each of these options have their own problems: high interest rates, making them difficult to pay back, as well as potential conflict with people close to you.

It’s at that point, when you hit a financial bottom, when you realize the importance of setting aside a certain amount of cash for unforeseen occurrences. Doing so can buy you peace of mind while sacrificing spending for the short term. Ideally, you want to have this cash saved up sooner rather than later so that you don’t suffer a major inconvenience when something does go wrong.