5 Reasons You Need An Emergency Fund

by - 5/29/2018 01:52:00 PM

The secret to life is expecting the unexpected. After all, that’s what it is. It’s a series of surprises, bumps in the road, headaches, hurdles, and epochs of uncertainty, and all of these tend to have a financial impact. That’s the overarching reason you need to have an emergency fund behind you. It’s the one thing that can protect you from all those unexpected nasties, no matter how massive or minute they may be. It’s what will take the heavy landing out of each bump in the road and stop you having to scrape together this or that just to get by in your lowest moments.

Don’t believe us, just have a look at this list of reasons why an emergency fund could help you:

1. The Escape From Debt
Debt is the big epidemic of our generation and trying to get out of debt is the unsung battle most people get engaged with. That’s where an emergency fund comes in handy. It will prevent you from adding to your debt when any unexpected expenses crop up. Think of it like this: it’s easier to put extra money toward your debt when you have a cushion for unexpected expenses.

2. One Income Only
We live in a two salary society, so if you only have one source of income in your household an emergency fund is absolutely essential. It’s what will help you stay afloat should you get made redundant, suffer an illness, or any number of things. As a sort of baseline, we recommend having a year’s worth of expenses saved up.

3. Keep Your Home
As an unfortunate as it is, foreclosures have become a reality for so many homeowners. But the only way that a home can be foreclosed if any mortgage payments are missed. Of course, if you’re going through this scenario already, your first port of call should be visiting DicksonLegal.com today but, if you are hoping to prevent this from happening, you need to have an emergency fund in place. It will allow you to keep paying your mortgage no matter what sort of unexpected things happens.

4. Fallback For Freelancers
The world is moving at the speed of light toward this new gig economy. It’s freelancers, self-employed and contractors galore. But as amazing as the freedom is, this does come with one major problem: you have no employment safety net. That’s why it is good to have an emergency fund saved up. But don’t just have this as a static savings account. Pay into it based on what you know about the future. For example, if you know there is a quiet period in the year, make sure you pay more into this in the months leading up.

5. Long-Distance Family

Travelling can be super-expensive, especially if you are having to book a last-minute seat on a plane or train, which can happen in the case of emergencies. That’s where an emergency fund can really come in handy and allow you to make an unforeseen trip home-home without it affecting the rest of your financials.

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