If you can’t think reasons why you need an emergency fund, think again. No matter how prepared you are, life has a way of throwing curve balls that you never expect.
When they are things we like, we call them serendipitous, surprises, gifts…
When they are things we don’t like we call them disasters, emergencies, lessons…
Here’s a terrifying statistic.
In the developed world, it’s estimated that 63% of households could not come up with the equivalent of US$1,000, £800 pounds, R10,000, €800 in the event of a real emergency.
How terrifying is that?
And in case you are sitting there thinking you have it all covered, here are some unexpected reasons to have an emergency fund.
You lose your job
There is no such thing as a job for life these days. Unless you are head-hunted on a daily basis, it pays to have an emergency reserve to fall back on until the right position becomes available.
Your emergency fund can help you stop adding to your debt with each bump in the road. An emergency fund can help cover the things you haven’t budgeted for. Like car repairs or medical costs. You can use your emergency fund to handle these stressful events. Making it easier for you to stay focused on getting out of debt. It is easier to pay extra money on debt right away when you have a cushion for unexpected expenses.
You try to start your car in the morning, but nothing happens.
Nothing is worse than a “surprise” car repair bill. But with an adequate emergency fund, you wouldn’t have to sweat it, and you could even afford a temporary rental car.
Your hours at work are cut
Since fewer hours equal less pay, you might be short on funds for a while. Without a savings buffer to fall back on, you could find yourself in a bind.
Medical or dental bills
You’re young, you’re healthy—what can go wrong? A lot, actually. From unexpected illnesses or cavities, to major accidents. One of the many reasons for an emergency fund is so you don’t find yourself with big medical expenses, and no way to pay for them.
Even if you have medical or dental insurance, that doesn’t guarantee you won’t have to pay for all or part of your care out-of-pocket. In addition to deductibles, some procedures might not be covered. Or you may max out your coverage for non-essential healthcare in your plan year.
Your beloved pet becomes ill
Nobody wants this to happen, but if the worst does happen and you are not insured, the vet’s bill will be astronomical.
You’re sitting down on the couch to watch a movie with a big bowl of popcorn and suddenly your toilet begins overflowing. Perfect! Not only would that ruin your evening plans, but it could break your budget. Plumbing emergencies aren’t cheap. Yet another good reason why you need an emergency fund.
Be prepared for anything
While you can’t ever prepare for every emergency, the reasons for an emergency fund are many. Your pipes may freeze, you could receive an unexpected tax bill, you may need to travel last minute to visit an ill relative. The list goes on and on. Planning now is the best way to ensure you can handle unforeseen challenges.
Do you have other reasons to have an emergency fund? Having an emergency fund means you can roll with whatever life throws at you. So If you don’t yet have one, start saving today! And you can start by reading our guide on how you can build an emergency you can be proud of.