The need for liquidity
Emergency savings, also called rainy day savings or contingency
savings, act as a form of insurance against unexpected,
irregular, and unpredictable expenses. Most households will
at some point face an unexpected financial event that current
income cannot support, leaving the household to scramble to
find liquid financial resources to make ends meet. Adequate
preparation for a financial emergency is especially important
for those in low-income households, who have less access
to traditional credit, and whose tighter budgets make saving
more difficult