Why do you need an emergency fund? Well consider this- life is going great! You are living the dream, you are able to pay all of your bills on time, and you still have a little money left over to buy an occasional pair of shoes. Then BAM! The carburetor goes out on your car. You are stranded on the side of the road with your beautiful new Louboutins. Sound familiar?
Sure it does, we have ALL been there at some point in our lives. Most Americans are not adequately financially prepared for life’s little mishaps. In fact, only 62% of Americans have $1,000 in savings to cover emergencies and 21% don’t have a savings account at all.
Let’s take a look at 7 reasons why you absolutely must have an emergency fund set up.
Unless you are Superman, there will likely be a time where illness or injury strikes. This is a double whammy because not only does being injured or sick impact your ability to work, but it is also super expensive. In the United States, a simple trip to the ER can set you back thousands of dollars. Even Superman succumbs to kryptonite, be prepared! This is one of the most important reasons to have an emergency fund because this is one of the most common reasons a person’s finances get off track.
2. Loss of Work
You are a badass! You totally rock at work and everyone loves you and your magnificent skills. Despite all of that, chances are that you will involuntarily be out of work at some point in your life. Whether you are laid off, need to take some time off to deal with personal matters, or are forced to quit due to the working environment/conditions, there is a very real chance you will have to deal with this during your career. Unfortunately, loss of work = loss of income. No Bueno.
3. Housing Emergencies
Call me crazy, but housing is one of those must-have items. You need a roof over your head of some sort and roofs cost money. Many times, expenses pop up when you are least expecting them (and least prepared for them!). If you are a homeowner, everything will break at the same time. Like, that is definitely going to happen at some point, if not at multiple points in your life. When my husband and I moved into our home, we had a major basement leak, furnace issues, hot water tank issues, etc. Those things are not cheap, yo!
If you are renting, you are at the mercy of someone else. The owner may decide to up and move leaving you totally in the lurch and in the need of a ginormous security deposit for another place, moving costs, and more. Yuck! You never want to worry about where you and your family will sleep.
4. Needs of Loved Ones
We are nice people so we absolutely adore our friends and family. We would do anything to help them out. Unfortunately, we sometimes do have to do anything to help them. Life happens and stuff comes up for our friends and family. Sometimes, these needs are so dire that they have no one else they can turn to. It is important to have that financial security so you can not only help yourself but also help someone else (disclaimer: I want to make sure to add, if you give to someone else before you are financially fit, the reason better be super-duper important, I’m talking life or death here).
Speaking of loved ones, children are really expensive. They are little cash-guzzling machines – diapers, formula, food, toys, car seats, clothes, fidget spinners, schooling, the list goes on. This stuff adds up and it adds up quickly! Not to mention, you have to pay to have the little nuggets in the first place. Whether you grow your family by having children or adopting, you want to make sure that your mind is fixated on the momentous joy of growing your family and enjoying them, not worrying about money.
Alright, I’m going to be depressing for a minute. Life happens and unfortunately, death happens. You want to make sure that you have adequate finances if, Lord forbid, you have to deal with the death of a loved one. So many people are forced to make sacrifices in honoring those they love because they do not have adequate financial resources. You will have enough to deal with during these moments, finances should be the last of these worries.
7. Opportunity Strikes
I’m going to redeem myself here and get us back on-board the happiness train. Like everything else we discussed, opportunity can often strike when you are least prepared for it. We need to make sure that we are in the position to seize any opportunities that come our way. This may be a new business venture or a great job which may require relocation expenses. Never let lack of financial resources get in the way of fully realizing your awesomeness. An emergency fund allows you the security to take advantage of opportunities that may come your way.
Having an emergency fund affords you infinite freedom and security to deal with the game of life. Now that we know that this is super-duper important, check out our next blog post which will show us how to get there.
Drop a comment below. What situations have you encountered that you needed an emergency fund? What challenges do you have in setting up an emergency fund. We would love to hear!
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