4 Reasons To Have An Emergency Fund
December 22, 2020
What are the reasons to have an emergency fund?
- Unanticipated medical bills
- Sudden home or car repairs
- Unexpected travel fees
- Loss of source of income
An emergency fund is different from your savings. This is the extra stash of cash you put away for situations you don’t expect so you don’t have to touch a coin from your savings. Having enough to cover sudden crises can prevent debt from piling up. For more reasons to have an emergency fund, read on!
Unanticipated Medical Bills
There are times when urgent medical care is needed. Hospital bills and doctor’s fees can be expensive. Even a checkup for the common cold can cost you a chunk of your money.
If you have children or other family members who are not working, setting aside additional funds for sick days can save you from unanticipated medical bills. This includes dental care because oral problems can occur if you don’t get enough dentist check-ups per year.
If you have pets, their food may already be included in your budget. But unexpected surgeries and medication can happen anytime. Having enough funds can cover your trip to the veterinarian even when you least expect them.
Sudden Home Or Car Repairs
Gone are the days when your parents would pay for everything in the house. If you live alone or own a home and a car, you can’t expect anybody else to maintain it for you. This is why you should set up an emergency fund. Even if you have a newly-built house, things can suddenly break. Common problems include plumbing leaks, overflowing drainage, and dangerous electrical wirings.
On the other hand, if you’re a careful driver, accidents can still happen. Even if you just park your car outside, collisions could still occur. This can lead to minor scratches or major dents which can cost money. Home and car repairs are things you can’t put off for later because damages could worsen and lead to more expenses.
Unexpected Travel Fees
Do you live alone? Most people that move far away from their families do so because of school or work. Being independent requires you to budget your money, and one of the things you should save for is an emergency fund.
If you suddenly need to take a trip home, having an emergency fund can help you cover the travel fee. This includes the fuel when you’re driving your own car, the fare for a bus commute, or a ticket for a flight. Be prepared for high costs because last-minute bookings can be expensive.
Loss Of Source Of Income
No matter how secure you are in your current job, there could still be unexpected factors that can lead to job loss. A pandemic, for example, can affect the global economy, leading to widespread lockdowns and termination of work. Companies could downsize, which can lead to many employees to get fired. Or maybe you could get sick and be unable to work for some time.
Applying for your next job can take time, and the bills won’t wait for you, so if you have a single source of income, then forming an emergency fund is even more important.
Hopefully, these reasons to have an emergency fund can motivate you to start putting away money for urgent situations in the future. This will help you protect your savings account, prevent debt, and give you the confidence to face any crisis.
For more financial advice, you may contact Benito Keh. As a veteran entrepreneur in the Philippines, he is knowledgeable in topics related to business and saving money. For more questions and inquiries, you can send your messages here.