When the unexpected happens, having an emergency fund can not only be a comfort, but a way to avoid going into debt. Many experts recommend having an emergency fund that could cover three to six months of your living expenses, if not more. Here are some reasons that you should consider putting money toward an emergency fund:
You’re saving for something specific. You can protect the money you have been saving to buy a home or go on a trip by using an emergency fund when unexpected expenses come up. Even though you may have to temporarily pause saving for your goal as you build the emergency fund back up, it keeps you from having to use the money that you were saving for your long-term goals.
You have a medical condition. Medical issues can cause you to run out of sick pay or use up your insurance deductible before the year is through. Having an emergency fund can help you offset these expenses.
Your family is far away. When you live far from home, it’s costly to make last-minute travel accommodations when a family emergency arises. By keeping some money saved, you can ensure that you can afford a plane ticket when an unexpected funeral or medical emergency occurs.
You own property. When you own a home, it’s important to plan for unexpected issues and costs, such as air conditioning or plumbing repairs. By having an emergency fund, you can make sure you’re prepared and just a little less stressed when unexpected problems arise.
You are a contractor or are self-employed. If you work as an independent contractor or are self-employed, you may not be able to file for unemployment benefits. Having an emergency fund can be a great way to prepare for slower seasons or a lack of work.
You rely on one source of income. If you are single or a one-income family, it’s extremely important that you have enough money saved to cover at least a year’s worth of living expenses. This protects you in cases where you could be kept from working due to illness or an unexpected job loss.
You’re working to pay off your debt. Keep yourself from going further in debt by creating an emergency fund that can help you cover unexpected expenses.
Source: The Balance Everyday
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