Why do you need an emergency reserve fund? Every financial plan has a reserve-fund component, but few planning discussions go so far as to detail what scenarios might cause you to actually need one.
If you wrote down a list of what those scenarios could be, you’d probably group them into three categories – those that involve the loss of income, those that involve the loss of an asset, and those that involve the introduction of a new expense.
In order to pay for those scenarios you’ll need to use some combination of income, savings, and insurance. Deciding on the right mix of those can be difficult, which is why we strongly advocate going through the exercise of planning for the possibilities with your financial advisor.
Darren McGraw & Mechelsen Private Client 
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