5 Reasons why Everyone Needs an Emergency Fund

5 reasons why everyone needs an emergency fund. Money savings

If you find yourself struggling every time you encounter a financial hurdle in your life, then it might be time to start considering the benefits of an emergency fund. An emergency fund can help to make sure that you’re capable of paying your bills, and shelling out cash for any unexpected expenses when problems naturally arise.

Without an emergency fund, you could open yourself up to countless potential problems including debt and discomfort. Here, we’ll look at just some of the reasons why everyone could benefit from having an emergency safety blanket in place.

Life is Unpredictable

The first, and most important reason why everyone needs an emergency fund is that no matter how good you are at budgeting, the truth is that we can’t prepare for everything. When you first begin to budget, you may find that you’re leaving out some of the essential expenses that you need to plan for, and an emergency fund can make sure that you’re ready to tackle those problems when they come up.

Just remember, as unplanned expenses do begin to emerge, you can write them down and adjust your budget accordingly to ensure that you won’t forget about them in the future. That doesn’t mean that you won’t need an emergency fund anymore, but it should ensure that you tap into it less frequently.

An Income Only Goes So Far

If you’re living alone, then the chances are you only have one source of income to rely on. Unfortunately, since you can’t turn to someone else for help when something goes wrong, you’ll find that you need even more help to ensure that you can fight back against potential problems that could arise.

Ideally, if you’re the sole income provider in your family, you’ll need to work on having at least a year’s worth of funds saved up. You can then build a larger emergency fund later if necessary. Remember, if you’re just starting a family, you might need to increase your emergency fund to take children into account.

Owning a Home is a Huge Commitment

If you own your own home, you’ll find that your need for an emergency fund is even more significant, as it’s up to you to pay for all the upkeep expenses and repairs that are necessary to keep your home in a livable condition.

As a homeowner, your emergency fund will give you the peace of mind that comes with knowing you have something to turn to if things go wrong and you need a little extra help. Remember, home repairs can be very expensive, as is something like replacing a boiler. The more you can save back to protect your home, the more you can rest assured that you will always have a comfortable place to live – no matter what hurdles might come your way.

You Need to Prepare for Major Issues

This follows on from the “life is unpredictable” comment. Even if nothing ever goes wrong with your home, and you keep hold of the same job for a number of years, you could still face major issues if you’re facing a serious medical problem or dental concern. Health issues aren’t only expensive, they can also mean that you end up having to take days, weeks, or even months away from work.

Whether you’re the sole provider for income in your household or not, a long time away from work is sure to have a negative impact on your quality of life. An emergency fund can help to soften the blow when you should be focusing on getting better.

Emergency Funds Help You Reach Your Goals

Finally, if you’re focusing on reaching an important financial goal, like starting your own business, or owning a property, your emergency fund will help to prevent you from dipping into your other savings when things go wrong. This should mean that you’re less likely to move backward on your goals instead of forwards.

Although your progress might slow down a little as you’ll need to replace your emergency funds too, you’ll be able to keep your savings untouched, so you don’t have to worry about losing track.

Though personal loans are available when you’re struggling to make ends meet, and you don’t have an emergency fund in place to help you overcome life’s little challenges, it’s often much better to budget some money aside for a rainy-day fund in case things go wrong. Borrowing options do exist, but they’ll only take you so far and can be very expensive to pay back.

 

 

*Collaborative Post
Photo by Philip Veater on Unsplash
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