Quiz: Starting and Maintaining an Emergency Fund

1. What is the recommended initial goal when starting an emergency fund? *

$100

One month's worth of living expenses

$500 to $1,000

Three to six months' worth of living expenses

Why is it important to start small when building an emergency fund? *

It’s easier to reach and helps build momentum

It prevents overspending in other areas

It allows you to build a savings habit without feeling overwhelmed

You can start investing earlier

What is one of the best ways to maintain your emergency fund consistently? *

Setting up automatic transfers from your checking account

Asking for help from friends and family

Putting aside cash manually every month

Only saving when you feel like it

Why should your emergency fund be kept in a separate account? *

To earn more interest

To avoid spending it impulsively

To avoid taxation

To make it harder for creditors to access it

What is one common method to free up money for your emergency fund? *

Taking out a loan

Reducing non-essential expenses

Buying items in bulk

Getting a new credit card

What should you do after using part of your emergency fund for an expense? *

Let it stay depleted until the next emergency

Replenish it as soon as possible

Transfer any remaining amount to your checking account

Stop saving and focus on paying off debt

Which of the following would qualify as a "true emergency" for using your emergency fund? *

Buying a new laptop

Going on vacation

Major car repairs needed to get to work

Replacing furniture

How can windfalls, such as bonuses or tax refunds, help with building an emergency fund? *

They can be used for fun purchases instead of savings

They allow you to make large contributions without affecting your regular budget

They should only be used to pay off debt

They are irrelevant to your emergency fund

When building an emergency fund, why is it important to balance this with other financial goals? *

To prevent neglecting other goals like retirement savings or debt repayment

To ensure you're always able to make discretionary purchases

To make sure you have enough for dining out

To make budgeting easier

What is one action step to take when balancing multiple financial goals while building your emergency fund? *

Focus only on building your emergency fund and pause all other goals

Split windfalls and bonuses between different financial goals

Cut all contributions to retirement savings

Use your credit card to supplement your emergency fund