If you undermine the need of having an Emergency Fund, think again. Even if you are prepared financially, life has this unique way of throwing a curveball that you never expected. The unexpected expenses are the main reason you should build an emergency fund, which should be easily accessible. Ideally, you should keep three to six months of expenses as an emergency fund.
You should keep in mind that ‘Anything can happen, anytime’. This doesn’t let you rule out the scenario where you would require an emergency fund. We have listed a few examples as to why you should build an emergency fund. Remember, these might occur in your life individually or in multiple situations at once.
⇒ Loss of Job And Difficulty In Finding A New Job Wih A Similar Salary
If you have kept three to six months of expenses as an emergency fund, you could survive easily. Meanwhile, you could search for a job that interests you and pays you well too. On the other hand, if you do not have an emergency fund, you might need to take the first job that comes your way, even if that work doesn’t have your interest.
⇒ The Tax Or Bill You Forgot Is Due Now
Missing a bill or forgetting about a tax is never a good idea. However, if you have an adequate emergency fund, you could pay it off in the last minute. Without an emergency fund, you could land in trouble.
⇒ You Discovered You Have A Chronic Illness
Falling sick will affect your work and you might end up losing it if this continues for a long period of time. This might also lead to you not getting the salary as per your potential but far less. An emergency fund could help you in such a situation.
⇒ Unexpected Pregnancy
It happens, period! If you have an emergency fund, you will be in a much more financially secure position to prepare for your new baby. Lack of a fund for emergencies during this time will only add to the tension.
⇒ Your Company Asks You To Take A Pay Cut
In this competitive world, finding a job of your liking in a short span of time is rare. This means with lesser pay, you could be short on funds for a little while. Without a fund for emergencies, which works as a backup, you could be left hanging financially.
⇒ Car Break-Down
Your car suddenly stops running or doesn’t start after multiple attempts. Here comes surprise expenditure in the form of a car repair bill. However, a fund for emergencies will certainly help you come out of this crunch.
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⇒ Medical Treatment For Your Loved Ones
God forbid, someone in your family or someone you know falls ill and get hospitalized. If they have cashless health insurance, you are good to go, however, if it is a reimbursement one, you will need a solid emergency fund to pay off the hospital bills. However, in a situation where they do not have health insurance, the emergency fund works as an angel. Not having an emergency fund will leave you in a situation you do not want to be in.
⇒ You Get Hospitalized
This goes without saying that if you get hospitalized without a fund for emergencies, you and your dependents, if any, are in lots of problems. Most certainly, a long leave might be left without pay. It is good to have an emergency fund for daily expenses and other medical expenditures. This way you get saved from various financial woes.
⇒ A Friend Or Relative Is In A Financial Crisis
If a close friend or relative asks for your help during a financial crisis, a fund for emergencies comes to aid. You will be able to help them stay afloat.
⇒ You Gain Weight And Need To Join A Gym
Well if you are not much of a fitness junkie, it is possible you did not prepare for this day. An emergency fund in this situation comes handy to pay for the gym membership or buying equipment, without messing up your monthly budget.
⇒ Burglary
One should be prepared for the worst. Burglary can leave you in a financial crunch till the time your case is solved. In the meantime, an emergency fund will work as a lifesaver for you.
⇒ Moving Out Or Shifting
Moving out or shifting is always expensive. It can mess up the budget that you have been carefully adhering to. You will need to rent or buy a property, which requires a lot of funds. An emergency fund in such cases will help you pay at least the down payment or a rental advance. Not having an emergency fund, in a case where you might be homeless for a while, will make you question your spending and saving choices.
⇒ Dream Job
What if your dream job comes your way but requires a reduction in salary. Having an emergency fund will give you the option of doing what you love without much financial trouble.
⇒ A Relative Or Close Friend Passes Away
Life is uncertain. You might need to travel to a far off place at a short notice, to attend a funeral. You need to book tickets at the last time and the fares are exorbitant. A fund for emergencies in such situations become handy.
⇒ Something You Love Is On Discount For The First Time
If it is a once in a lifetime discount and you miss it, you will regret it your whole life. Having a separate emergency fund will not let you curse yourself.
All of the above-mentioned situations and many others might push an otherwise stable financial situation into chaos. It is damaging to your financial life and can be very stressful. It might affect your health as well. Having an emergency fund can control most of this. You can keep it as cash or open a savings account with a promise to deposit money every now and then. One can also ask your bank to do it for you where the bank sets aside a certain portion of your income to a different account. You have to make sure that you do not withdraw money from the emergency fund for any other reasons apart from a valid emergency. If you have a fund for emergencies, you could face any financial problem coming in your way. Planning in advance is better than ending up in a crisis. Start your emergency fund today if you haven’t yet; you will be glad that you did.
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