Emergency funds—as the name implies—come in handy in times of distress. There may be several arguments as to how much one person should save for an emergency fund; that is for another discussion. However, we can never stress enough how important it is to have a financial backup in case things go sideways. To give you a clear picture on how important emergency funds are, here are a few reasons why you should start saving up for an emergency fund now.
Unexpected health issues
Health is wealth, as the timeless adage goes. If a person is in perfect condition to perform his tasks, he can accomplish his goals swiftly. However, you won’t be able to perform at your best when are suffering from an illness. Emergency funds will come in handy if your cough syrup or painkillers cannot do their job anymore. After all, you don’t want to end up choosing between a simple trip to the doctor and a week’s worth of your food.
There are many reasons why a person may be laid off: economic downturn, end of contract, executive decision, and others. Regardless, losing your primary financial line means becoming unable to afford basic needs such as food, utilities, and shelter. When it comes to job loss, some financial experts say that six months’ worth of expenses should help you stay afloat in times of depression, based on the average time a person can switch from one job to another. If you have an emergency fund standing by and you get the pink slip, then the only thing you have to worry about is bouncing back and getting a new job.
(Check out: Emerge From Emergencies With A Contingency Fund)
After employment, you may not have opted out of emails from online job databases and one day, a shiny job offer that is too lucrative to refuse pops on your email. There is a catch, however: it’s thousands of miles away from your home and you need to settle down in a brave new world. When you have an emergency fund to back you up, you don’t have to worry about your transition period since you can cover the cost of moving out and settling down. Job offers are diamonds in the rough, and having a financial reservoir when the opportunity knocks will help you achieve more in life.
Home repairs and renovation
Let’s face it: your shelter will experience wear and tear over time, and there is nothing you can do other than have it fixed. If you start to see water leaks on your ceiling, your first instinct should be calling your local handyman and order supplies from your favorite hardware. However, sudden home repairs require money, sometimes lots of it. A dilapidated house can affect the overall conditions of people living in it—that’s why it is important to have funds on standby make sure that your home is in tip-top condition. After all, a house’s condition reflects the state of people living in it.
Demise of person close to you
No one likes to talk about death, let alone prepare for it. However, death is the one final inescapable truth we all have to face, one way or another. Death claims lives without warning at any time, at any place. Since we can never predict when our beloved ones will pass away, we have to be financially prepared to make sure that our loved ones will receive proper treatment even until the very end. The unpredictability of death also demands for ready financial access that can be used in times of distress. With emergency funds, you can focus on the things that are more important such as remembering the memory of our dearly departed.
Like we said before, we can never stress enough how important emergency funds are. There are unexpected things that may happen to us that will leave us financially bedridden. It’s better to be prepared for unforeseen circumstances than to scramble in the dark.