An emergency fund is a fund account that is maintained for the purpose of meeting the financial needs in the event of an emergency.
Assume a family of four people, with two kids and parents, has monthly expenses of $2,000 that includes utilities, groceries, fuel, etc. In a case of an emergency such as the only working parent lose his job, the family expenses will need an emergency fund should have at least $12,000 (three to six times) in order to supply for uncertain six months.
People can invest the amounts in secure investments such as government bonds that cannot default even in times of financial crises.
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