What is an emergency fund used for?
Financial advisers often suggest that people save a portion of every paycheck, even if the amount is small. Over time, small deposits add up, and the interest earned on savings makes the total grow faster. An emergency fund is especially important. It allows a family to pay for unexpected costs, such as a car repair or a medical bill, without taking on debt. Many advisers recommend saving enough to cover three to six months of expenses.
Answer and explanation
Correct answer: B. Unexpected costs
- Step 1: The passage mentions car repairs and medical bills. Answer: Unexpected costs. Why not the others: Vacations, Daily groceries and Rent only don't fit.
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