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Chances are you’ve faced events or obstacles in life that could be categorized as being an emergency. These are events that catch you off guard and usually have financial ramifications. An emergency can be as simple as having a furnace break down or it can be a health issue that turns your world upside down.
While we can’t predict the next emergency, we can prepare for it. Creating an emergency fund is the ideal way to deal with the potential financial consequences of emergencies. What’s the best place to keep your emergency fund, though? While you can just open a new account at your local or online bank, there are other options to consider.
In this article, we’ll look at five of the best options for your emergency fund.
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An emergency fund is money that you set apart from other savings. It’s there to help you deal with the unexpected events of life. Emergencies can take the form of an unpredictable expense, such as your car breaking down. They also can take the form of an unexpected loss of income, such as having to change jobs or not receiving a bonus you were expecting.
The word emergency evokes different images depending on who you are. An emergency fund should only be used for true emergencies, though. It’s not a backup cash account or vacation fund. If you get into a car accident, that can create an emergency need for funds. Or emergencies could be unexpected hospital visits, home repairs, losing your job or a death in the family. The bottom line? Emergencies aren’t selective. They happen to everyone.
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When the time comes to start building your emergency fund, where is the best place to keep it? It’s best to keep your emergency fund separate from your other bank accounts. You want your emergency fund to be accessible in case you need access it quickly. And yet you also want it not to be too convenient to reach, so that you’re not tempted to dip into these funds when it’s not necessary.
Here are some of the best options for where to build your emergency fund.
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