When you are living for the moment and barely saving a thing, it is easy to imagine that life will always be this good. However optimistic you are about the future, failing to create an emergency fund could be your financial downfall.
The problem is that you just never know what might happen next. You can’t plan for accidents or illnesses, you don’t know what lies just around the corner. Having an emergency fund helps to mitigate the potential for financial disaster – no matter what.
Accidents and Injuries
You never know when you might get caught in an accident and while you might be most concerned about treating your injuries, you should also consider the financial implications. Paying for hospital and medical bills, taking time off to recover and potentially having to change job can all have a significant financial impact.
In most cases, a lawyer should be able to help you get the compensation you deserve after an accident to help pay for your recovery. Going for an injury lawyer with plenty of experience in cases similar to your own is a good idea, so if you had an accident on a motorcycle, SalinasTrialLaw.com/san-antonio/motorcycle-accident-attorney would be a good place to start.
Even if you are almost guaranteed a win, an emergency fund can help to cover your costs while you wait for your compensation to come through.
Illness and Health
Everyone is ill from time to time so if you don’t have paid sick leave, having an emergency fund is vital. Even taking one or two days off can have a bigger financial impact than you imagine so giving yourself the equivalent of a cash filled cushion to rest on while you get better will be a weight off your mind.
But you might also require a bit of cash if you want to take time to protect your health. Many people now suffer with stress and anxiety at work and taking a bit of time to deal with these issues is important for avoiding burnout later on. When it comes to staying in peak condition, preventing ill health is just as important as treating it.
Managing the Risk
Life isn’t risk-free – even when you are consciously making an effort to ensure plain sailing! There are always going to be bumps along the road and having an emergency fund is a bit like having great suspension on a car – you won’t notice the bumps and potholes so much.
Risk comes in many forms – from losing your job to starting a family by a happy accident – and the more you can do to manage the risk financially, the better off you will be. Think of this as your own personal insurance account. You pay roughly 10% of your income into your savings to balance out the risk that you might not have enough later on.
Extra: Why you need a emergency Fund?
We use this word all the time but do we know the real meaning of it (See below). There is so many situations that could occur in a blink of a eye, car repairs, house taxes, school tuition for the kids,unexpected bills and more.
It is not always a easy task or option to have a emergency fund but let see what are the differents reasons-benefits on how to make it happen for us. Having a budget is the right tool to have!
Source: Copyright Google.com [Definition]
“An emergency fund is a pool of liquid money set aside for unforeseen expenses like a medical expense or a car repair. Having an emergency fund can be the difference between a small bump in your financial life and complete disaster in your entire life. An emergency fund insures against life’s unexpected expenses.“
Discover the Five Reasons.
Reason #1 : The Debt Trap
You are trying to get out of debt but are stock in the same moving train, there is no movement. In our modern DNA, there is a lot of consumers on this earth depending on debt to go on their day by day life. It is understandable that for some of us, it is not even possible to think about a emergency fund.
When we have a unexpected event happening, facing a bad situation , take us by surprise! There is a consequence for not having a saving option, it will put us more into debt and further away from our goal to have a possible emergency fund.
Why not ask your employer to set aside even a tiny little amount in a separate account for you or ask your banker if this option is possible.Money you don’t see is money you don’t use if we don’t count mr credit card. When there is something happening in the futur, your debt payment will not be affected by any emergency coming your way.
Reason #2: One income
Just got married, one is in school and the other partner is working… At the top of your game and starting your working life as a professional,you should set some boundaries with your partner to identify what is really important for the both of you.
Once this is clear, you could work on a tight budget identifying all the spendings occuring during the month and understand how much you have at the end of the month.
As a next step, establish a saving routing of at least 10% of your income so you know that if there is something happening in the futur you are protected but also protecting your partner.It only take one bad situation to destroy a entire family .
Discover 3 more reasons for a Emergency Fund ===> Continue here.
Though you might feel perfectly happy with your finances right now, you must be prepared for the future. This is your own insurance policy.
Enjoy life, one day at a time.
Popular posts on Bag of Cents: