You probably have some idea of what an emergency fund is, the question is, do you have one or need one? Financially savvy individuals, including you, are great at setting a budget for expected daily expenses.
However, can you afford to have your car fixed right then and there if it dies on you? Or fix a leaking roof that caves in and requires replacing? Such emergencies could put a major dent on your savings if you are not prepared.
But if you have an emergency fund, you won’t be blindsided. Below are solid reasons why you need to save up for an emergency fund.
For Avoiding Amassing Credit Card Debt
One of the most convenient ways for most individuals to get cash as fast as possible is through a credit card. Although this might be fine for a while, if you don’t pay your card in full each month, your debt will just grow and grow. But if you have an emergency fund, you won’t need to use your credit card as much.
For Maintenance Purposes
For the majority of Americans, owning a house is the great American dream. While things such as your property taxes and mortgage on your house in Utah are generally fixed throughout your loan term, there are some costs related to home ownership and maintenance that you can’t avoid. Put simply, it’s very crucial that you’re well prepared in the event that something breaks and need repair or replacement.
For If You Lose Your Job
While your emergency fund won’t really replace a stable income, it could, however, help you in bridging the gap between jobs. Having sufficient money saved up would enable you to recharge and relax while waiting for the next great job to come along instead of just taking the first job offered to you.
For Avoiding Unnecessary Stress
Among the most common causes of stress, and consequently, fights between couples. Although an emergency fund wouldn’t really solve your problems, it could help by giving you and your partner some peace of mind.
Having some money saved up will give you some flexibility when you really need to spend on something. This isn’t only applicable for couples because even if you are single, you need to have an emergency fund that you can leverage as a safety net against unanticipated expenses.
For Maintaining Your Health
You’re probably covered by health insurance, but your coverage might not be enough to cover things such as lost wages, unemployment and things like that. Your finances are the last thing you should be worrying about in the event that you get sick.
But having an emergency fund could help ease your worries. Even if your health insurance finally pays up, you wouldn’t want to further stress yourself and get caught up in all the red tape when you should be using all your energy to recover.
Your emergency fund will be handy in case unexpected and unplanned expenses come up. It’s also just plain wise to have some cash saved up as you can use it for supplementing your income if you get laid off and when you really need to spend on something for your health or house.