Multiple Choice
Which of the following types of expenses should you include in a savings plan, according to financial literacy principles such as those taught in EverFi?
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1. Introduction to Accounting
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Which of the following helps you prepare for unexpected expenses?
A
Maintaining an emergency fund
B
Increasing discretionary spending
C
Investing only in long-term assets
D
Delaying payment of bills
Verified step by step guidance1
Understand the concept of an emergency fund: An emergency fund is a financial safety net set aside to cover unexpected expenses, such as medical emergencies, car repairs, or sudden loss of income.
Evaluate the options provided: Analyze each option to determine its relevance to preparing for unexpected expenses.
Option 1: Maintaining an emergency fund - This is directly related to preparing for unexpected expenses as it provides readily available cash for emergencies.
Option 2: Increasing discretionary spending - This reduces the amount of money available for savings and does not help prepare for unexpected expenses.
Option 3: Investing only in long-term assets and Option 4: Delaying payment of bills - Both of these options do not provide immediate liquidity or financial readiness for emergencies.
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