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Basics Beginner: Building an Emergency Fund

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1.
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.
2.
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.
3.
An advantage to using an automatic savings account to build an emergency fund is that it _______.
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Saves you time and energy on finding money to save. Putting your saving on automatic can free up time for other financial planning.
4.
Why are stocks not considered a good parking place for emergency funds?
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The stock market is volatile. It is possible for the price of your stock to be down when you need the money to cover an emergency expense.
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.