emergency-fund

Vocabulary Word

Definition

An 'emergency fund' is a safety net of money saved for unexpected circumstances or financial shocks, like job loss, medical emergencies, car repairs, or other sudden expenses.

Examples in Different Contexts

In wealth management, advising clients on the size of their 'emergency fund' is tailored to their net worth and risk profile. A wealth manager might explain, 'Your emergency fund should be proportionate to your overall financial portfolio and risk tolerance.'

Practice Scenarios

Personal-Finance

Scenario:

Our finances should be resilient enough to withstand unexpected bumps on the road.

Response:

Yes, establishing an emergency fund can provide a great cushion against any financial emergencies.

Public-Policy

Scenario:

The government is taking every possible measure to ameliorate the effects of this natural disaster.

Response:

A well-funded emergency fund could significantly support these efforts and provide quick relief.