Intro to Saving
Overview
There are all kinds of worthwhile reasons to save money: a home, college, retirement, even a vacation. But the very first thing to save for is a rainy day. If you don’t have a safety net when the unexpected happens—a car repair, an injury, a job loss—you become vulnerable to making bad and expensive decisions.
What can go wrong if you have an emergency situation and don’t have rainy-day savings to get you through?
You may have to start using credit cards, which can mean high interest charges
You may have to withdraw money from your retirement savings, which can mean paying lots of taxes
You may have to withdraw money from your retirement savings, which can mean paying penalties
All of the above
In the event of a financial emergency, which of the following is generally the worst choice?
Borrowing from a friend or family member
Withdrawing from your retirement account
Tapping your rainy day fund
Taking a temporary break from contributing to your retirement account
What does it mean to save for a rainy day?
To pay for flood insurance
To save for financial emergencies
To prepare for the hurricane season
To put away money for retirement