A reserve fund refers to a savings account or other highly liquid asset that is set aside by an individual or a business to cover unexpected future costs or financial obligations. It serves as a financial buffer or safety net to handle unforeseen expenses or emergencies. The reserve fund is typically separate from regular operating funds and is held in a secure and easily accessible form to ensure its availability when needed. By establishing a reserve fund, individuals and businesses can better manage financial risks and be prepared for unexpected circumstances without relying on external borrowing or incurring unnecessary financial strain.
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