A pool of money dedicated to covering losses from unforeseen events. It strengthens your overall financial security and complements insurance coverage.
What to consider
Keep the account separate from routine funds.
Ensure quick access when needed.
Regularly review the account balance and contributions.
Real world scenarios
An individual opened a safety net account to catch unexpected expenses without affecting daily finances.
A small business set up a safety net account to cover short-term cash flow gaps.
A family maintained a safety net account for emergencies like car repairs or medical bills.