Definition

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.

Related terms

Insurance & Financial Protection