Having an emergency fund in place is more than just about financial planning— it’s about ensuring that you keep yourself and your family safe during an unexpected and even potentially catastrophic event.
Even though you might never imagine that the worst could happen to you, the truth is that emergencies happen every day that most people aren’t prepared for! According to a 2020 report, 4 out of 10 adults in the United States said they would experience financial hardship having to recover from an emergency of more than $400.
The best thing you can do is make sure you’re set for an unexpected situation. Don’t believe it? Here are some of the most important reasons why you should have an emergency fund.
If there’s one thing we can all agree on about the weather it’s that it’s unpredictable. You never know when a storm could hit and you could find yourself without power. You want to make sure that you have the funds available to call an electrician or repair your roof. Not everything is always covered by your insurance policy, so knowing that you have money on hand to cover any unexpected damage is worth the peace of mind.
Even though you may think that you have everything going for you at your job, you never know when the company could go under, or your position could suddenly be replaced. You want to make sure that you have a cushion so that you can cover your financial obligations like mortgage and other basic living costs. Most financial experts recommend having at least three months of your salary put aside so you’re covered while you’re looking for new employment.
Sadly, The United States is one of the most inconvenient places to find yourself injured or ill. A trip to the hospital doesn’t come cheap, and as such, you can find yourself in for an exorbitant bill if you need to see a doctor.
An emergency fund gives you the reassurance of knowing that you or your family will have all their medical bills covered if they need it. Again, insurance doesn’t always cover everything, so having extra funds on hand will ensure you don’t have to worry about your family’s well-being.
Depending on where you live, you may rely on your car on a daily basis. If your car starts acting up, you’re usually in for at least several hundreds of dollars of damage if not more. An emergency fund ensures that you can get your car fixed quickly without interrupting your schedule. It can also ensure that you have the funds to cover a rental vehicle if the damages to your car will take a significant amount of time to repair.
Life is unexpected at times. Being prepared for emergencies is important not only for yourself but for your family. Start putting away a small amount every month as early on as you can, and give yourself the peace of mind of knowing you’ve got what you need in an emergency.