Which of the following is a common term for money that is set aside for emergencies?

An emergency fund is specifically designated for unexpected expenses or financial hardships, such as medical emergencies, car repairs, or job loss. This fund provides individuals with a financial safety net, allowing them to handle unforeseen situations without resorting to credit cards or loans, which can lead to debt.

The purpose of an emergency fund is to ensure financial stability and peace of mind. It is typically recommended that individuals save three to six months’ worth of living expenses in this fund. This helps to prepare for life’s uncertainties and maintain overall financial health.

The other options, while important components of personal finance, serve different purposes. Investments are typically meant for generating wealth over time, retirement savings focus on securing financial stability in old age, and a checking account is primarily used for managing day-to-day expenses and transactions. None of these serve the specific purpose of providing readily accessible funds for emergencies like an emergency fund does.