Every household should take proactive measures to help mitigate the amount of debt they incur due to emergencies. This is one reason you should include an emergency fund in their budget. What is an emergency fund? I'm so glad you asked.
According to Miranda Marquit's article Emergency Fund vs. Rainy Day Fund: What's the Difference? an emergency fund is "...what you’ll need to cover expenses if you are unemployed for a few months. It may also be used if you get sick and have unexpected medical bills.”
You'd think being prepared for future emergencies would be common knowledge but you may be shocked to know that nearly half of Americans wouldn't be prepared to handle an emergency with a significant expense attached to it:
[According to the Federal Reserve's 2014 Survey of Household Economics and Decisionmaking, 47% of Americans say that they wouldn't be able to cover a $400 emergency expense. That lack of preparedness could lead to maxing out credit cards, taking out expensive short-term loans, or worse.] source
What are your thoughts? Have you included an emergency fund in your household budget? Would you be prepared to handle unseen emergency with a hefty expense?
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