Which choice or choices best describes the purpose of an emergency fund?

A. An emergency fund prepares you for unexpected expenses.

B. An emergency fund keeps you from borrowing money from friends and family.

C. An emergency fund removes the worry about expenses not in the budget.

D. All of the above are good reasons to have an emergency fund.

Answer

The best choice that describes the purpose of an emergency fund is D. All of the above are good reasons to have an emergency fund.

Explanation:

A. An emergency fund prepares you for unexpected expenses. - This is a primary purpose of having an emergency fund. It acts as a financial safety net to cover unforeseen costs, such as medical emergencies, car repairs, or job loss.

B. An emergency fund keeps you from borrowing money from friends and family. - Having an emergency fund means that you can rely on your savings for unexpected expenses rather than seeking financial help from others, which can strain personal relationships.

C. An emergency fund removes the worry about expenses not in the budget. - Knowing that you have a financial cushion helps reduce anxiety regarding unplanned expenses. It provides peace of mind, knowing that you can handle financial surprises without disrupting your budget.

Since all of these statements accurately reflect the purposes and benefits of having an emergency fund, the comprehensive answer is D. All of the above are good reasons to have an emergency fund.