The one thing that the ongoing pandemic has taught us is that an emergency can strike at any time, and you can not do anything about it other than being prepared. A crisis such as a natural disaster or a health condition that keeps you off from work, or even an economic downturn causing job losses and salary cuts might not be under your control but ensuring that you have enough funds to steer through is indeed under your control.
So how do you go about your life and meet your essential expenses in times like these?
Well, the answer is simple- build an emergency fund that could help you sail through. Read on for five reasons you should have an emergency fund.
If you have one source of income, it is necessary to have a solid emergency fund. This can help you get through an illness that keeps you from working or an unexpected job loss.
If you are single, start working on building up your emergency fund as quickly as possible. It's better to have 3-6 months of expenses in your emergency fund. If you are married, you must have at least a year's worth of expenses in your emergency fund. You can gradually build up a larger emergency fund to ensure the extra financial cushion.
Repairs and upkeep are an inevitable part of owning a house. Home repairs can be expensive, so it's better to set up funds to cover remodelling and most repairs, like plumbing or replacing an air conditioner.
The emergency fund can help you handle such costs and make owning your home a bit less stressful.
It is expensive to travel home these days, and the costs go up if you are travelling last minute for an emergency. An emergency fund helps cover the cost of last-minute tickets to go home or visit other family members in case of a medical emergency or a funeral.
Medical issues and routine checkups can be costly, and insurance companies may not pay everything you expect them to pay. You may also run out of your sick leaves and end up taking additional days off without pay.
An emergency fund can help you deal with such costs and make it easier to get through these challenging times.
An emergency fund can help you reach long-term financial goals like owning a home or a car, a world tour or Europe trip or even starting a business without dipping into those savings when unexpected expenses crop up. This can prevent you from taking a step backwards with these financial goals.
Just think of your emergency fund as an insurance policy that helps you protect your savings against unexpected expenses.
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