Definition of Rainy Day Fund
What is a "rainy day fund"? What is the definition of the term "rainy day fund"?
A "rainy day fund" is an amount of money that is set aside for an emergency or unexpected event.
The point of the "rainy day fund" is to cover living expenses after something unexpected happens, such as losing a job or being injured and needing to take a significant amount of time off of work.
Most financial planners recommend that people have at least six month's worth of living expenses saved up in a "rainy day fund", and that this money be easily accessible (such as holding the cash in a checking account or savings account, where it can be easily accessed).
Thanks to the economic downturn of the past few years, many households do not have anything close to the recommended amount of emergency savings.
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