There are a number of good reasons that everyone should have an emergency fund in place. If you ever find yourself in need of money for something important, you’ll be glad to have the extra money. When you take the time to explore some of these benefits, you will understand why doing this is such a good idea. Whether it is a crucial car repair or some other expense, this fund can be incredibly helpful.
If you suddenly lose your job for any reason, you’ll be able to use the money from your emergency fund to get by. Even a short period of unemployment can be extremely difficult to survive if you don’t have any money set aside. It will be much easier to get by and keep paying your bills. It is a good idea to have enough money to cover three months of essential expenses like rent and utilities.
Pay Back a Loan
You can also use some money from your emergency fund to pay back a loan. If you have taken out a loan but your regular income can’t cover your payments, you’ll have the cash to avoid defaulting. This can be especially helpful for paying back smaller short term loans. You want to avoid being late on any loan, as it will negatively impact your credit. You will also be hit with late fees, which makes paying everything back even more challenging.
If you are suddenly hit with major medical expenses, having an emergency fund will help you out quite a bit. Medical bills can stack up very quickly and cost a lot, so you’ll need all the money you can get your hands on. You cannot simply avoid paying your medical bills and expect everything to be okay. This is actually one of the most common reasons that people create an emergency fund for themselves in the first place. You don’t want to find yourself with a big hospital bill and no way to pay it.
Another good reason to start putting money towards an emergency fund is to cover car repairs. You could have to pay for major repairs to your car at the drop of a hat, so it’s good to have the necessary funds already at your disposal. If you absolutely need your car for getting to work, this is going to be very important. An emergency fund can give you a way to cover the cost of these repairs so you don’t lose your job.
If you have a pet of some kind, one trip to the veterinarian can be very costly. Some people find that they aren’t able to pay for essential care for their pet because they just don’t have the money. Having money that you’ve set aside will ensure that you can keep your pet healthy no matter what.
Helping Family in Need
Those who have a good size emergency fund in place will be able to help a family member who is going through a difficult financial period. It’s always a good feeling to help people close to you when possible. Just make sure that you trust the person to pay you back. Lending money, even when it is to family members, can be a bad idea.
You Own a Home
It is especially important for all homeowners to have an emergency fund in place. There are lots of things that can happen with a home that require a good amount of money to remedy. This could be your furnace breaking or problems with your roof. If you find yourself in this type of situation, it’s good to know that you have the money to cover the necessary repairs. You simply don’t want to own a house without having money to cover emergencies relating to it.
You Don’t Live Near Your Family
If you live quite a ways from your family, there might come a time when you need to travel back home immediately. This could be because someone in your family has died or is very sick. Either way, it is good to have extra money for a plane ticket.
Maintaining an emergency fund will give you peace of mind and prevent a variety of bad situations from becoming a nightmare. You should put as much as you possibly can from each paycheck into this fund. The larger the fund is, the less you will have to worry about what is going to happen when you have a sudden and important expense. You will be able to sleep a little bit better at night with an emergency fund in place. This is something that can help you in many different ways, so you should seriously consider starting on it right away.