Money

Why Are Emergency Funds Important?

With all the chaos in our lives, we need all the help we can get, and what better way to...

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W ith all the chaos in our lives, we need all the help we can get, and what better way to arrange for the support than setting up a necessary emergency fund right away? Wondering why are emergency funds important? Well, we wrote a detailed guide on how they can save you. Here is a list of all the situations where an emergency fund is your best bet!

When You're Self-Employed 

Some of the problems of self-employment involve receiving no employment benefits and how a set amount of income is not guaranteed. 

So, if any problem ever presents itself, an emergency fund can always help! When business is slow in a particular month, or you are suddenly in dire need of money, the savings in your fund can be of great use in trying to help pay for necessities. Thus, they help overcome any such financial issues.

In Case Of A Medical Emergency 

According to an investigation carried out by healthcare.gov, treatment of a mere fracture can cost the average person over $7,500. For most people, affording such unexpected expenses at such short notice is not possible, which is why an emergency fund is even more critical. 

Having backup funds in your account will, at the very least, help you and your family deal with any such medical emergencies without having to take loans that can take a further toll on your finances.

When You Have Only One Source Of Income

It is always important to be prepared for any emergency that may befall you. When you have a single source of income, there is no guarantee you will always have it or if the income you receive will be substantial at all times. 

Hence, setting an emergency fund will aid you in times of sudden unemployment and help you when the income from a single job is not enough. So, for your own good, make use of this opportunity and try to set up an emergency fund whenever possible!

If You Own A House Or A Car

Owning your own house and vehicles can come with the added stress of unexpected but necessary repairs. For your home, for example, you may need to have the windows fixed or the air conditioner cleaned, but your current income may not be able to support sudden expenses such as these. 

Moreover, for your vehicle, you may need to suddenly buy a new set of tires or fix the sound system, which is an unexpected but necessary expense. However, an emergency fund will help you cover the costs of all such repairs through the funds you have saved, reducing all unnecessary financial burdens for you.

If You Have A Debt To Pay Off 

Paying debt is not an easy task. When budgeting, people don't budget for things like sudden and unexpected expenses. This might be a potential problem when trying to pay someone back since not everyone can afford to pay for so many things at once. Emergency funds are a blessing; you can spend your income the way you had planned to spend it and all additional expenses can be covered through the savings in your fund account! 

This way, not only are you relieved of unneeded stress, but you can also shift all of your attention and focus to more critical tasks at hand, such as getting out of debt.

When You're Starting To Budget

Budgeting is a stressful but essential requirement when trying to be responsible for your finances. Whether you're starting a family or just trying to be more organized, budgeting can significantly reduce stress when done correctly. However, it is very easy to leave out certain expenses accidentally when you first start. This can be very troublesome when an unexpected expense arrives, and you have no amount left from your income to spare. 

An emergency fund is vital since it can help you cover sudden costs while you make sure to include this outlay the next time you budget. Thus, these funds can help you while you try to fit into your new budgeting routine! So, why are emergency funds important? Well, they can save your life! 

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  • Savings
  • Emergency
  • finance
  • debt-free
  • financial planning