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Portfolios 104: Building an Emergency Fund

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1.
How much money should you keep in an emergency fund?
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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.
2.
You will likely need an emergency fund most when you're not financially stable.
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True. People who are just starting out are usually most in need of such a fund.
3.
A retirement account is not a good candidate to hold an emergency fund.
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True. Retirement accounts require years to build up. When you take money out now, you can lose a lot of growth in future years.
4.
When starting an emergency cash fund, it's always best to start with a high amount.
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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.
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True. Usually, we can find money to pay our bills.