I don’t care who you are or where you come from; you need an emergency fund. For too long people have seen emergency funds as something that ‘might’ be a bit helpful. However, I truly believe that saving money and putting it in an emergency fund is an essential way of stabilizing your financial life. If you don’t agree with me, then here are a few reasons that will sway your mind:
Helps You Stick To A Budget
If you’ve started budgeting, then you know how hard it is to limit your spending and hold some money back. But, if you set up an emergency fund, you can deposit money into it every month. This money goes into your fund instead of being spent on other things. As a result, you can stick to your budget and avoid overspending!
Assists With Debt Payments
Let’s say you have an emergency fund and suddenly end up in debt. Maybe you didn’t pay your credit card bill for a couple of months and have some repayments due. Thanks to your fund, you can dip into it and make these repayments. This prevents you from using your other source of money, which means you’d have less in your account to cover other payments, which would result in more debt. Instead of this becoming an issue, your emergency fund can cover it.
Protection After Accidents
An accident can happen when you least expect it. What’s more, accidents cause injuries, and injuries end up costing a lot of money. You could spend weeks in hospital requiring seriously expensive attention. With an emergency fund, you have cash ready to cover you after an accident. It can pay for your medical bills, or help pay for you to file a personal injury lawsuit to get the compensation that covers your bills. Either way, you can get out of a tough financial position without needing to touch your bank account and meddle with money that you need for bills, etc.
Makes It Easier To Reach Saving Goals
The primary purpose of an emergency fund is that you don’t touch it unless there’s an emergency. As such, it can be a great place to put your savings when you’re trying to reach a specific goal. Worst case scenario; an emergency pops up, and you have the money to cover it in your fund. Best case scenario; no emergencies demand your attention, and you’ve raised funds to reach your saving goal in record time! This is why so many people start these funds when they’re aiming to buy a car or save for a mortgage. They’re proven ways of saving money, fast.
As you can see, an emergency fund helps in a variety of ways. Personally, I think it’s one of those things you don’t appreciate until you’re in a situation where it could come in handy. They add financial protection and security to help you remain in control of your money. You’ll also notice I’ve put a video just above this little paragraph to help show you how to save an emergency fund. Feel free to follow that advice if you want!