A reserve fund is money a municipality sets aside for specific future purposes or general contingencies. Common reserves include equipment replacement reserves (saving to replace vehicles and machinery), capital reserves (future infrastructure projects), tax rate stabilization reserves (smoothing fluctuations), and contingency reserves (unexpected needs). Reserve funds provide financial flexibility, reduce borrowing needs, and protect against emergencies. Provincial legislation often requires or regulates certain reserves. Contributions come from operating budgets or surplus revenues; withdrawals require authorization for specified purposes. Well-managed reserves indicate sound financial planning. Reserve policies govern how much to save, for what purposes, and when funds can be used.