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Whether your goal is to pay off debt or save up enough money for your dream vacation, working out your budget is the first step. You can find countless articles online that discuss each aspect of budgeting. However, you won’t go far without learning about one of the most common pieces of advice: You should build an emergency fund, also known as an emergency savings account.
What is an emergency savings account, and why is it important?
An emergency savings account is money that you set aside specifically to cover unexpected situations. You will find several options and opinions regarding where to keep that money, but many people use a checking or savings account separate from their primary account. The idea is to save enough money to cover a few months of expenses in the event that you lose your job. Your emergency fund can also be used to pay for large, unexpected expenses such as hospital bills or car repairs.
With a healthy emergency fund, you can decrease the odds that you will have to rely on credit cards or other forms of debt to get through a financial hardship.
Are you ready to learn more?
Take a Health IQ quiz about emergency savings accounts and find out how much you know about them. Health IQ offers a variety of quizzes that test your knowledge about many important lifestyle topics. You’ll also find useful information that can help you prepare for the future, including ways you can improve your health consciousness for life insurance coverage.