When we tell you that you need to start an emergency fund, this will be old news to you. We are sure that you have already been reminded by others, be that from members of your family, or finance professionals that seek to educate people online or on the television. Now, for all we know you might have an emergency fund already.
And when we say ’emergency fund,’ we are talking about something separate from the savings account you should have set up to help you save up for those luxury items you desire in life and to help you prepare for old age.
An emergency fund is different; it is a pot of money that will act as a lifeline should you ever find yourself in trouble, and while you might have something in place, chances are, you might not, as according to a 2017 article in The Financial Post, only a quarter of us do. If you haven’t already started an emergency fund, here are a couple of incentives for you to do so.
#1: You might lose your job
We don’t all have job security, especially those of us who work on temporary or zero-hour contracts. And some of us work in professions where redundancies are commonplace. For these reasons, you might one day find yourself without a job.
You might also find yourself out of work if you do something that gets you fired, or if you fall ill and find yourself unable to work for an extended period of time. While you might qualify for unemployment benefit, you might still need money to live on while your application is being processed.
And considering the change to your financial situation, you might still need that extra money to pay for your rent or mortgage and to cover your other bills. In such cases, your emergency fund will be invaluable, as it should support you while you’re on the lookout for other work.
#2: You might have car trouble
You already know that running a car is expensive, and the costs can rise if your vehicle suffers from any maintenance problems. Especially if you are dependant on your car for your work and family needs, you will struggle if you don’t have the funds available to pay for the repairs needed at your local garage.
You might also get into an accident on the roads, which will be costly on both a personal and financial level. Again, you might have to pay for repair work on your vehicle, and if you are hurt, you might also have to suffer the expense of medical bills.
While a car accident attorney will work on your behalf if you weren’t at fault, you might still have a wait before you are paid any money owed to you as compensation, and you might also have to foot the bill for legal fees. To curb some of your stress in any of these situations, your emergency fund will take away some of the financial pain you will be going through.
We have covered just two instances as to when an emergency fund will come in useful, but there are other situations where the money might be needed. For example, you might receive a larger than expected tax bill. You might need emergency pet care. And the weather could lay waste to your home!
Bonus: Smile with a Emergency Fund
Life is full of uncertainties and it’s really difficult to predict the twists and turns. This is never more true when looked at from a financial point of view. It’s virtually impossible to predict when a possible personal financial crisis may occur. Everything seems hunky dory when your income is stable, but do you have contingencies in place should your income fall dramatically?
It’s easy to bury our heads in the sand and assume that everything will be ok, but could you cope if life takes a dramatic change of direction?
You could liken life to a game of Monopoly, perhaps not quite as random as the shake of dice, but it can be very unpredictable. Unless you have a crystal ball (that works!) you will be unable to tell if you are going to suffer a lack of income due to illness, sickness, accident, redundancy or a business which fails.
Homeowners may not be able to predict property damage due to flood, fire or theft and what about cars, once they start to go wrong they can become a real money pit.Whatever financial crisis’s we are faced with, we still need to pay the mortgage, rent, bills and meet living costs, so it’s essential to plan for life’s unpredictabilities.
Putting aside some money every month now will help to lower the impact of any future disasters.In fact make building up an emergency fund a priority. If you find yourself in a situation where you need money quickly, try asking friends or family.
If this isn’t possible you made need to look at other funding options such as credit cards and loans. Ensure that you can meet repayments and devise a repayment plan. Finance can be applied for when time is short via loans no credit checks required. This will also be helpful if you have a poor credit score, be sure to check that you can afford the repayments.
Often money is just too tight to even consider saving any, so it is essential to take stock of your whole financial situation in order to identify areas where savings can be made. Read on for inspiration.
Create a budget
Budgeting is a simple concept, however for budgeting to be successful you really need to be in total control of your finances. To do this you need to be aware of all your incomings and outgoings. Compile a list of all your essential outgoings such as mortgage, rent, insurances, loans, bills and daily living essentials.
This will highlight to you exactly how much money you need to survive on a monthly basis. Then list all the non essential expenditure, you may be surprised by the results! The daily coffee on your way to work and the magazines you buy begin to add up.
You may even discover defunct gym membership payments or insurance payments for items you no longer own! Would you have the funds to see you through these difficult times?
So, if you haven’t already, start to put money aside today into an emergency fund. You never know when you might need it! Believe in your own powers!
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