To many people the concept of an emergency fund is foreign. Many do not realize that you can acknowledge that bad financial times are headed your way and then set aside funds to help you get through those tough times.
Others, while they claim to have an emergency fund, really do not because it is a catchall. It is an account where they through money of they were to ever have any left and then spend it whenever they think they have a need. Unfortunately, when the emergency hit they already used the money for a car, clothes, movie tickets, restaurants – your name it , but it is gone.
Your emergency fund needs to be set aside for only emergencies. That money, each and every dollar, has a name on it and should be used for nothing but emergencies.
There is nothing wrong with saving for different things and having them all in the same account. However, clear documentation should be kept so that you know exactly how much money is for each savings project and, especially, for your emergency fund.
Just like being prepared for any emergency, be prepared financially. When you are the storm you face will not be as difficult.
