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1.
Should you ever consider adding additional money to your emergency cash fund?
Yes. If you receive a bonus or raise at work, you should try to add money to your emergency cash fund, before you get used to spending the extra money. You might also consider looking for ways to trim your monthly spending, in order to add to your emergency cash fund.
2.
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.
3.
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.
4.
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.
5.
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.