You may have heard the terms "emergency savings" and "rainy day funds" and think they're interchangeable terms when it comes to your finances. However, financial experts say there is a difference and that they are both equally important in terms of protecting your budget and overall financial security. David Sant with Cyprus Credit Union shared the differences between the two types of funds and why they are both important.
RAINY DAY FUND
"Rainy day funds are intended for those smaller, more common expenses, such as a car or appliance repair. Typically, these accounts contain about a couple thousand dollars. So while they may not be enough to live on, they can cover you in a pinch."
"Emergency funds are built for longer term expenses, such as losing a job or unexpected medical expenses. It has been recommended that you have at least three to six months' worth of living expenses set aside in this type of account."
For more information, visit cypruscu.com.