emergency fund
ih-MER-jen-see FUND
/ɪˈmɜːrdʒənsi fʌnd/
A personal bank account containing money set aside for use in an emergency.
Specifically for unexpected events like job loss, medical emergencies, or major home repairs, typically 3-6 months of living expenses.
The story behind the word. This is a straightforward compound term. 'Emergency' comes from the Latin 'emergere,' meaning 'to rise out' or 'bring to light,' referring to an unforeseen event that 'rises up.' 'Fund' comes from the Latin 'fundus,' meaning 'bottom' or 'foundation,' later referring to a stock of money. Together, they describe a financial 'foundation' for unexpected events.
Word relationships
- rainy day fund: More informal term for money saved for unexpected difficulties.
- contingency fund: Often used in a business or governmental context for funds reserved for unforeseen expenses.
Commonly confused with
- savings: An 'emergency fund' is a type of savings specifically earmarked for emergencies, whereas 'savings' can be for any future goal.
Collocations
- build an emergency fund
- tap into emergency fund
- fully funded emergency fund
- adequate emergency fund
Example sentences
- "Financial experts recommend having at least three to six months' worth of living expenses saved in an emergency fund." Financial planning advice.
- "When her car broke down unexpectedly, she was relieved to have an emergency fund to cover the repair costs without going into debt." Dealing with unexpected costs.
- "Losing his job was stressful, but his robust emergency fund provided a crucial safety net while he searched for new employment." Job security.
Memory hook
It's a 'fund' for 'emergencies' – simple and direct! Unexpected money
When not to use
Do not use 'emergency fund' for money saved for planned expenses like a vacation or down payment; those are general savings.
Fun facts
- The idea of an emergency fund gained significant traction after economic downturns, highlighting the importance of financial resilience.
Explore more words
nest egg, contingency, account, balance, earthquake, Unemployment
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