Emergency funds are that safety net that protects you when you fall due to financial stress. You can never predict the next problem you have to face; the mishap can not only be challenging but a financial burden, and therefore emergency fund acts as a shock absorber. I was always told by my parents to set up emergency funds, but being the irresponsible individual I am, I did not do so.
It was then I truly realized the significance of emergency funds, safe to say now I always deposit first for the emergency funds every month. The best way to have some emergency fund is by saving a chunk from your monthly salary and keeping it separate as if it doesn’t belong to you. You can save money through other means too; for example, spending less and using saving coupons for everything and you can also get coupons and discount codes via online websites like RetailMeNot, ClothingRIC, and Groupon. I know still many people are unaware of what an emergency fund is and how it serves us in rough and tough times. So keep on scrolling below to know what those situations are and how to tackle them money-wise with the aid of emergency funds:
1. A big savior during accidents
The accidents are not only physically grueling but also counted as one of the major fiscal setbacks. If you had an accident you have to take care of medical bills, pay for the damage bills and manage thick and thin through your sick leaves. Apart from car accidents, there are many other mishaps and most of them have the same consequences. The emergency funds will upkeep you here as you can pay for and everything easily and you can take rest as much as required by living on your emergency fund as an income. Because of the emergency fund, you will be able to pay attention to body injuries rather than monetary ones.
2. Emergency Funds helps when you are jobless
The company you worked for went bankrupt, or it was sealed for other issues, or due to some other circumstances you had to quit your job yourself and you became unemployed. Finding a new job can take up from weeks to months, what you will do in the meantime without any earnings? You will be anxious to get a job as soon as possible and will be ready to work at any place because you are worried about your expenses. This financial strain will not let you relax and you may find it difficult to look for a more suitable job. The emergency fund will again be your savior here, you can pay for bills, groceries, and other essentials from this fund till you get on your feet.
3. Domestic accidents
Nowadays we are totally at the mercy of domestic machines and have a ton of them around the house, have you ever thought that one day you wake up and your coffee machine does not work? Or drain pipe under the kitchen broke or your dishwasher is making funny noises? If even one of these machines is not working you will get new or repaired as soon as possible. It not only goes for domestic appliances but also with furniture, you cannot sleep on a broken bed neither you can sprawl in front of the TV on a broken sofa, this home repair outlays can take out a good chunk of your salary and put a dent in your budget.
4. Miscellaneous and unexpected expenditures
What if you have to fly to another city in an emergency? Or you bought a condo and now it is in need of repairs? Or you had to move because of natural disasters? Do you think you can afford all these unforeseen catastrophes on your monthly income? No, you cannot, that is you need to have an emergency fund that will help you to navigate through this difficult time.
I hope these scenarios have assisted you to comprehend the purpose and significance of emergency funds, and if you don’t have emergency funds yet this will get you to start working on one. It is very easy to set emergency funds no matter how much you earn, you can directly transfer some amount from your salary to account for an emergency fund or either save it on your own.