What is an Emergency Fund? A Simple Explanation for Kids, Teens and Beginners

What is an Emergency Fund? Finance 101: Easy Peasy Finance for Kids and Beginners

Introduction to Emergency Fund for Kids and Teens

This video explains the concept of Emergency Fund in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about creating an Emergency Fund, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is an Emergency Fund - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

Howdy Wall St. Willy!

I heard my parents saying they want to open an emergency fund. But…

What is an emergency fund anyway?

An emergency fund is money that you keep aside for unexpected expenses or if you lose your job.

Well how much money should I have in my emergency fund?

You should usually have 3 to 6 months of your expenses, which is the money that you pay for your bills.

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Well, who should have an emergency fund?

Emergency Fund for Kids Teens and Beginners - A Simple Explanation
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Everybody or just really rich people?

Everyone should. The amount that you have in your emergency fund might be different depending on your earnings and your expenses.

Well, do I need a special bank account for an emergency fund?

No, you do not. You can just use your regular savings account for your emergency fund.

Well, what should I do first – Invest or start an emergency fund?

First you should start an emergency fund.

This is because even though investments are for long term goals, an emergency fund gives you a lot of peace of mind: you know that you have enough money to pay your bills even if things go wrong.

Investing emergency fund in the stock market

Investing Money from the Emergency Fund
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Can my emergency fund be in the form of stocks so that if the market goes up, I get more money?

No, your emergency fund cannot be in the form of stocks because if the market goes down and that is the time when you have one of your unexpected expenses or you lose your job, then you won’t have enough money to pay your expenses.

Okay. Thank you very much for telling me about Emergency Funds, Wall St. Willy.

You are welcome, Sooper Cooper. Remember, Finance is Your Friend!

Video Featured in the Below Financial Literacy Course for Kids & Teens

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Podcast: What is an Emergency Fund and Why it is Important

Emergency Fund
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