If an expensive item breaks, use your emergency fund to cover the cost to fix or replace it.
What is an emergency fund?
- A personal budget set aside as a financial safety net for future mishaps or unexpected expenses is known as an emergency fund, also known as a contingency fund.
- A critical component of financial planning is intended to ensure that one's personal finances are prepared for any emergency, reducing the risks of becoming reliant on credit, falling into debt, or running out of money in general if such a situation arises.
- If a costly item breaks, use your emergency fund to cover the cost of repairing or replacing it.
- Job loss, medical emergencies, automobile problems, home appliance repairs/replacements, and unexpected travel expenses can all be covered by emergency funds.
Therefore, if an expensive item breaks, use your emergency fund to cover the cost to fix or replace it.
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