Reserve funds are accounts which are set aside by an individual or sometimes it will be a business entity to meet unexpected expenses that can happen in future. The fund will be in the form of savings account.
For example if cash is deposited in to a reserve account to save some money, it can be called as reserve funds. This helps when there is a case of unemployment. You can utilize this reserve funds at that time. Condominiums regularly put reserve funds in which the owner will have to pay a monthly amount in order to maintain the condominium. Reserve funds are made to establish covering expenses which is supposed to happen in future. Here there will be routine expenses, scheduled expenses and unexpected expenses. They are made to make sure that the cash is set aside to cover all the expenses so that cash need not be taken from the general expenses. The reserve funds should be created if required by law.
Examples for Reserve funds are those funds which are associated with condo association or building cooperative. In this condition the tenants will have to pay an amount for covering the expenses for maintenance and related expenses in order to run the building. The dues will be gathered to reserve funds which in turn will be used to help with the expenses which are unexpected. Example for a Reserve funds is pension reserve fund. In most of the companies the employees will have to sign for pension schemes and which will help to get a payment during pension. So payments thus collected from the existing employees will be put to this to make sure that this will be made available when the respective person will retire from the company.
They are also made by the Financial Institutions, Government and private households. The size of the fund also can change. But the general intention of this is to make a fund or deposit fund, which will help them to get an interest and thereby the fund will also grow with time. So when the expenses of the companies increases this can be adjusted from this fund. They are kept in a liquidated form. The reason for keeping Reserve funds in this form is because we are not sure when there will be the need for this. Reserve funds are always helpful.
Reserve funds are the cash which is kept apart for attaining some goals. Reserve funds are accounts set aside by business or individual in order to meet the unexpected costs that will arise or come in future. Mostly these types of Reserve funds will be savings accounts. These are the funds which are reserved for the expenses which will arise in future and can be liquidated easily.