Saving & Financial Reserves
Emergency funds, goals, automation, compound interest and purchasing power.
Emergency funds: purpose, size and tradeoffs
An emergency fund is cash reserved for unplanned expenses or income interruptions; the appropriate amount depends on individual circumstances.
Emergency fund vs sinking fund
Both involve setting money aside, but one prepares for uncertainty while the other prepares for a known future cost.
Turning a savings goal into a monthly plan
A savings goal becomes easier to evaluate when it has an amount, current balance, target date and contribution schedule.
Automatic saving: benefits and limits
Automatic transfers can make saving consistent, but they still need to fit the timing of income and bills.
Compound interest explained
Compound interest means interest is calculated on the original amount plus previously accumulated interest.
Inflation and purchasing power
Inflation describes a general rise in prices over time, which means a fixed amount of money may buy less in the future.