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Basics Beginner: Building an Emergency Fund

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1.
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.
2.
Should you ever consider adding additional money to your emergency cash fund?
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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.
3.
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.
4.
Where is the best place to keep an emergency cash fund?
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Keep your emergency cash fund in a savings account or money market account. These types of accounts are the most accessible in case of an emergency.
5.
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.