3 Reasons You Need To Start An Emergency Fund
To some people, an emergency fund seems like a luxury. It’s not something you necessarily need, but it can be helpful. In my eyes, this is the completely wrong way to approach an emergency fund! Not only is it essential, but it can also help you in so many ways. There are instances where these funds can almost save your life and stop catastrophic consequences from taking place.
Of course, you need some compelling reasons to believe this. So, here are a few times where an emergency fund will prove more than valuable:
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To help you pay off debt
An emergency fund provides you with some extra money when you need it most. What happens if you suddenly end up in debt? Forget the reason, you now owe someone a lot of money. Unfortunately, you don’t have enough cash to keep up with your repayments, so the debt gets bigger and bigger.
Here, an emergency fund comes to the rescue. You have access to additional funds that help you pay off your debt. In some scenarios, you may have enough money in the fund to cover the entire debt. In others, you can use it alongside something like debt consolidation to reduce your debt and make it more manageable. As a result, you’ve saved yourself from a very sticky situation that could ruin your finances.
To cover emergency repairs
It’s not hard to imagine a situation where you end up needing emergency repairs. This may be because bad weather hits your house, or you go into a car accident with someone. Either way, you need to pay to repair things. If you don’t have an emergency fund, you may lack the money to cover these repairs. As such, you end up taking out a loan, leading to debt! Or, you can just about manage to pay for things, but all the money in your account is depleted. Now, you’re living off pennies for a few months until you build your finances back up.
With your emergency fund, this isn’t as big of an issue. It can either cover the cost of the repairs or provide a supplement alongside your regular income. Consequently, you’re no longer put in a precarious situation!
To pay for medical bills
Similarly, you may be in a position where you suddenly have medical bills to pay. You weren’t expecting this, so you didn’t have time to save up much money. What can you do about it?
Again, your emergency fund saves the day by giving you a safety net. Now, you can afford your medical bills and don’t have to make any sacrifices. Genuinely, this can save your life! Without the fund you may feel like you can’t afford essential medical bills and don’t bother paying them, putting your health at risk.
Hopefully, this has made it clear how crucial an emergency fund is to your life. There are countless scenarios where you may need money right away. If you have some stashed away, then you’ve always got access to some extra cash if you need it.