Here Are Four Reasons Why You Need An Emergency Fund
If you thought you could get by just fine without an emergency fund, you’re wrong — that is, unless you’re soaring on a high paycheck, of course, then there’s no need for you to be reading this financial advice anyway! Assuming you’re among the majority who are trying to make a living from a day job with regular expenses and a regular paycheck, here are a couple of reasons why you really do need an emergency fund:
You’re Trying to Give Debt the Boot
An emergency fund to dip into will be a great help for all those unexpected, unpredictable costs that may pop up when you least expect it, especially when you can’t afford it. Think of the time your car needed repairs or that time you got gastric flu and visited the doctor. Yes, these things tend to happen when you don’t have the funds to cover for the costs. Well, having an emergency fund means having a safety net to catch you for those falls, so the next time your dog is unexpectedly poisoned or your kid loses his school shoes, you have extra cash to spend. This means less credit, less strain on your account, and less debt!
You’ve Started Budgeting
If you’re just starting out with budgeting and trying to find your footing in handling your monthly expenses, it’s best if you have an emergency fund to help you ease into the complexities of budgeting in the first year or so. These are the planned expenses that you need to cover if you’re thinking of living off of a specific amount for the next specified period of time. Just make sure to replace your emergency funds with the amount the moment you can! For example, annual taxes, organization fees, or yearly memberships/subscriptions that do not form part of your monthly expenses can be taken care of from your emergency fund if you’ve really got to get them out of the way.
You Have Only One Income
If you only have one income stream every month, it is absolutely essential to have an emergency fund. This is because job loss is a reality, and it happens for many reasons — some out of your control as well. The business you work for may close, they may downsize and retrench, or you may become ill or move out of town. Whatever the case, you will need the security of knowing that you have a source of funds for the next few months to survive off of until you get back onto your feet. Of course, if you are running a business or two or if you are married and your spouse is employed or generating income, then it is not as important to have an emergency fund going. But it is still a good idea so that you don’t place yourself or anybody else under unnecessary financial strain.
You Live Away From Family
If you live far from the ones you love, then it goes without saying that you will certainly miss them very much! Naturally, you will want to visit them as much as possible, and you will need plenty of cash to do so which will be directly proportional to how far away from them you live. The farther you are from your family, the more expensive it will be for you to visit them — and you need to have funds to dip into to make this happen. Otherwise, you are going to go about living life very lonely for a while. Airline tickets, train and bus fares, and basically any other means of transport you can think of are all very costly, especially with luggage.
There are just too many reasons for you to have an emergency account, and this list would go on forever if we were to name even a fraction of them. So, the bottom line truly is that an emergency fund is something that you need to prioritize on your financial scheme. Get a fund going, no matter how little you contribute to it or how much — just be diligent to do so every time you have a chance. Also, make it a habit that once the money is in there, you don’t use it unless it really is important, and there is no other way of paying for the cost without getting into debt. Cheers!
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