An emergency fund is required in financial planning to
A)maintain credit rating.
B)maintain certain standards of living.
C)maintain sufficient insurance.
D)maintain adequate liquidity.

Question

Quizplus · Accepted Answer

An emergency fund is meant to provide adequate liquidity to cover unexpected expenses, such as a job loss, medical emergency, or car repair. Having an emergency fund allows individuals to avoid high-interest debt or dipping into retirement savings. While maintaining a good credit rating and certain standards of living are important, they are not the primary function of an emergency fund. Sufficient insurance is also important, but insurance alone may not cover all unexpected expenses.

An Emergency Fund Is Required in Financial Planning to