Everyone should have an emergency fund, but many people don’t. Learn how to build one before you need it.
Many Americans live paycheck to paycheck, which is a recipe for financial hardship. Unexpected events like a loss of income or emergency expenses can easily upend financial stability.
An emergency fund can help you through short-term financial challenges and prevent a dire long-term financial situation.
You can’t go back in time, but you can always start today! Here are fourteen reasons you should drop what you’re doing and set up an emergency fund (after you read this, of course).
Mitigating Potential Job Loss
Losing your source of income is scary, but it can sometimes come out of nowhere, and you’ll want to be prepared with some cash.
Dental Emergencies
Nobody wants to have their tooth knocked out. But if it happens, you’ll have the funds to pay for it.
Pet Emergencies
Health insurance will cover some of your expenses, but many pay for their pet’s healthcare out of pocket. An emergency savings can help cover any of these costs.
Home Repairs
If you’re a homeowner, having an emergency fund for when something goes wrong with the plumbing, the heat, or anything else is an absolute must.
Medical Bills
Even with decent insurance, you’ll probably pay for some procedures or tests yourself. But with an emergency fund, you know it’s already handled.
Car Troubles
Emergency funds will come in handy if you’re having car issues. Many people depend on their cars to get to work, so paying off repairs and getting them done right away is non-negotiable.
Reduces Temptation to Spend
Are you self-aware enough to know you’re dipping into your savings a little too much? Let yourself: but first, start an emergency fund you swear not to touch unless you have a real emergency.
Essential Big-Ticket Costs or Items
You never know what life will throw at you. But when you have an emergency fund, you’ll at least have some cushion if you need to buy a new car, move to a new city, or get on a last-minute flight.
Rent or Insurance Plan Hikes
Unexpected shifts in expenses you typically budget a specific amount for can throw a big wrench in your financial plan, but not if you have some money on the side to ease into it.
Unexpected Leave From Work
You don’t have to get fired to need an emergency fund; many people fall ill or get injured and have to take time off work. If you’re an hourly employee, this can seriously strain your finances, so having an emergency fund will lower some of the stress of wondering how you’ll pay for things.
Financial Parachute
If your finances are a bit chaotic, it’s best not to rely on credit cards if you can help. Emergency funds can help you tread water while you figure things out.
Keep Your Financial Goals
The sudden need to spend a large chunk of change can seriously hinder the progress of your financial goals, but emergency funds will keep you on track.
Build Confidence
Not everyone has a good relationship with saving money. If that sounds like you, an emergency fund could be exactly what you need to prove that you can be responsible with your finances.
General Peace of Mind
How much less anxious would you feel if you knew you had a few hundred or even a thousand dollars, you could use at the drop of a hat? That alone is worth it.
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