If you have an emergency and need to come up with $500 right now, could you do it? While emergency funds might not be the flashiest or most exciting financial goal, it’s the foundation your entire financial health is built upon. Without it, it's just a matter of time before an unexpected jolt causes a crack that’ll eventually bring the whole house down.
Despite numerous emergency cash options, an emergency fund is a cushion of money to help you stay afloat in case you have an emergency; it’s like a safety net for your finances.
Here are fourteen reasons why you need to save for emergencies:
You Need To Keep A Home
If you own a house, it follows that all the money needed for upkeeps and repair would be from your pocket. It would be good if you have a portion of your budget intended for significant maintenance and remodeling. Still, sometimes, unexpected expenses, like bathroom and furnace repairs, might catch you unprepared.
Your savings for emergencies can help you manage the expenditures, making a comfortable living less expensive and financially stressful.
You Have A Surprise Car Repair
You go out in the garage one morning, start your car to get ready to work, but nothing happens. Or, you’re driving and all of a sudden plumes of black smoke puffs under your hood. Aside from that, all the indicators on your dashboard are blinking.
These are some of the worst things that might happen to your car. Though you don't want that, sometimes they do happen.
In living from one paycheck to another, an unexpected car repair is something that you don't like. But, if you have an emergency fund, you can use a portion of that savings to pay the hefty bill of your car repair.
You’re Saving For A Goal
If you have financial goals, like paying off your credit card debt, an emergency fund lets you stay on track with those goals. When something goes wrong, for example, say you’ve paid off your credit card, but then your car breaks down, and you don't have the money to fix, the tendency is you have to put it on the credit card that you just paid off. These instances can be a real bummer, and now you're back where you started.
On the other hand, when you have an emergency fund, you can fix your car without going back into debt.
You Have Health Issues
An issue that compromises your health will most probably cause you to maximize your deductibles every payday to cover medical insurance. Plus, a routine check-up, a required laboratory test, and worst, a sick leave with no pay may cut through a sizable portion of your income.
Having proper funds for your emergency funds will help you deal with all the costs and keep you up in going through your sick days.
You Only Have One Job
Let's say you hate your job and you want to start looking for another one. But, you're scared because if you lose your job, you don't have anything to fall back on. Well, it's a concrete example, but an emergency fund gives you power.
Emergency funds give you something to fall back on. You still need a stable job, but if you're a little less reliant on it financially, you have the freedom to look around and keep your options open without being worried that you're going to lose the only job you have.
You Had An Accident And Was Bedridden
Accidents, such as car wrecks or at work, are the primary sources of almost everyone's financial woes. The mere fact that nobody ever planned for these accidents, can leave both you and your finances hurting and aching all over.
The money that had built up on your emergency fund can be utilized for your healing, so you don’t need to suffer the aches of your body and drowning in debt at the same time.
You’re Not In Control
In managing your money, a sense of control is pretty important. An emergency fund can give you that sense of full control over your cash and the things that might happen.
While we know for a fact that emergency cases are sometimes inevitable if you have emergency funds, it doesn't feel like you have money problems that can completely destroy your life.
Your Family Is Hit By A Natural Disaster
Wildfires, storms, earthquakes, etc. are natural disasters that sometimes displace a lot of families from their homes. While insurance backs you up in natural calamities, cash on hand is still needed to put your family somewhere safe, buy them something to eat, clothes, and everything that would carry them through the disaster.
Indeed, there are a lot of expenses that sprout out of a natural disaster. The best way for you and your family to survive through such calamities is saving for emergencies.
A Family Member Died
On top of the grief that one experiences during a death in the family are the ordeal that comes along with a brutally expensive burial cost. Even the cheapest burial services and ceremonies would still cost a thousand dollars or two. Worst is when a family member died, and they don't have money or insurance, the cost of burial would be charged to the pockets of the nearest kin.
If you have emergency funds, you don't have to worry about the money. Instead, you can be more sympathetic in mourning instead.
You Live Far Away From Family
Traveling home, despite its promises of warm hugs and beaming faces from family members, is actually expensive. The costs go even steeper if your trip is decided at the last minute in events of medical emergencies or deaths among family members.
It helps to have a healthy sum of money on your savings to cover these costs.
You Forgot Paying Your Taxes On Time
When it comes to paying taxes, you should never mess with the government in doing so. Forgetting to pay your taxes would incur penalties, which will add up to your already piling bills and expenditures. Worst is, you just remembered that you have some taxes to pay just now and payday would be three weeks from now. How can you pay those taxes and not compound the penalties?
An adequate emergency fund will allow you to go ahead and pay those taxes while giving you a lesson to plan to pay on time the next payment schedule at the same time.
You’re Having A Baby (unexpectedly)
Perhaps you’re living with your partner or your wife, though you’re looking forward to it but not ready yet, having a baby would be a knot that would bind your family tighter in love. Expenses that come with having a baby might include costs intended for supplies of milk and toiletries, clothes, amenities, etc.
A well-funded emergency fund will put you in a much better situation to prepare for your baby and the effects of it on your finances if, for example, your company doesn’t give paid parental leaves and benefits.
You Have A Once-In-A-Lifetime Purchase Attack
Sometimes, in life, people have something that they really desired. Buying this particular thing would satisfy their deepest cravings. If this once-in-a-lifetime purchase grows up in your head and you happen to spot a bargain, if you don't have the fund, then you’re out of luck.
With emergency funds, you can cheat some cash out from it and get your hands on that thing that you wanted most. But, this must not be done regularly. Emergency funds should be intended for emergencies and not for once-in-a-lifetime purchases.
Your Job Requires You To Relocate
What will happen if you’ve been given a fantastic promotion, but it should be in your company's other branch, which is in another part of the country? You've got to move or probably relocate. Sad to say, you might be trapped where you are in the absence of a savings backup.
On the other hand, if you have a well-funded emergency fund, you can use the money to cover rentals on the onset of your relocation and adjust from that point.
All of these emergencies and many more can cause a stable and towering financial situation to just collapse in a blink of an eye. It’s stressful and can cause damage to both yourself and your finances. At the same time, these emergencies leave you with a feeling like that of juggling a chainsaw.
Much of these can be mitigated by maintaining an emergency fund that you can commit to adding money regularly.
You can save for now, and when the amount is adequate, you can just leave it sitting on the back and tap on it when you’re faced with an emergency.
With emergency funds during times of emergency, rather than being in a crisis, worries and frustrations will all melt away with advanced planning of your finances.