Why You REALLY Need an Emergency Fund

Feb 28, 2021 | Lifestyle | 0 comments

Managing your finances should always be a top priority but a surprising number of people overlook the importance of having an emergency fund. Even the most comprehensive budget can’t account for every eventuality, which is one of the reasons why having an emergency stash of cash is essential. To help you get started and to keep you motivated, take a look at these five reasons why you really an emergency fund:

1. You’re saving for something important

When you’ve got savings goals, it’s easy to assume that all of your spare cash should be diverted to your savings account. However, this increases the likelihood of dipping into your savings when an unexpected expense crops up. Of course, seeing your savings balance go down can be demotivating and may even put you off your stride.

If you have a separate emergency fund, however, you won’t have to dip into your savings when something unexpected happens. When you need to pay an unforeseen bill or fund urgent repairs, for example, you can use your emergency fund, instead of having to withdraw some or all of your savings.

2.  You own a car

If you own a vehicle, then you certainly can’t be without an emergency fund. Although some vehicle expenses, like tax and insurance, are predictable, many aren’t. When you break down and need a towing service, like https://sg3towingandrecovery.com/, or when you need to get your car repaired, you’ll need to be able to access the funds easily. Fortunately, an emergency fund gives you this flexibility. 

Many people need a vehicle in order to get to work, which means that being without a car can have a major impact on your income. By having an emergency fund to fall back on, however, you can ensure that unexpected faults or repairs won’t be difficult to cope with.

3.  you want to get out of debt

Whether you’re paying off your mortgage or trying to get out of credit card debt, not having an emergency fund can make it hard to transform your finances. If you don’t have a fund to fall back on, you’re more likely to take out a loan or use a credit card to fund unforeseen expenses. Of course, this will increase your debt, even though you’ve been working hard to get out of the red.

When you have to pay interest on the money you’ve used, you’ll end up paying more in the long run, which can lead to further difficulties in the future. With an emergency fund, however, you can pay the added expenditure without relying on commercial lenders and without being forced to accept high rates of interest.

4.  you have bad credit

If you have bad credit, you may not even have the option of getting into debt in order to fund essential expenses. If your vehicle breaks down and you don’t have an emergency fund and you can’t get credit, you might have no way of getting it repaired. If you can’t then get to and from work, you could be at risk of losing your job, which means you’ll have no income. Although this might seem like a far-fetched situation, it’s something that millions of people encounter every day. 

If you have bad credit, the only way you’re likely to be able to get credit is by paying an extremely high interest rate. Unfortunately, this type of borrowing often has disastrous consequences and can lead to a spiral of debt. To avoid this happening to you, be sure to build up an emergency fund as quickly as you can.

5.  you’re the breadwinner

If you’re single, you live in a one-income family or you earn more than your partner, you may take on the responsibility of the majority of bills in your household. Even if you earn a good income, there are always unexpected costs that crop up. To protect your finances, it’s important to have some funds you can access in the event of an emergency. This means you won’t have to disrupt your budget or miss important payments when something unexpected happens.

6.  Expecting the unexpected

You may not be able to predict when something will go wrong or exactly what it will be, but you know that it will happen at some time or another. This should be all the motivation you need to get started building an emergency fund. By contributing to the fund regularly, you can ensure that you’ll be able to access the funds you need and give yourself peace of mind in the meantime. 

best,

– a contributed post

P.S.  Was this post helpful?  Consider buying us a coffee to show your love <3

Buy Us A Coffee!Buy Us A Coffee!
[convertkit form=1317971]

POSTS YOU’LL LOVE

15 Father’s Day Gift Ideas That Won’t Break The Bank

15 Father’s Day Gift Ideas That Won’t Break The Bank

Updated On May 14, 2020Some of the links in this post are “affiliate links.”  This means if you click on the link and purchase the item, WSW will receive an affiliate commission.  Additionally, Who Says What is a member of the Amazon Affiliate Program.  Please review...

read more

TRENDING PRODUCTS

2020 LIFE BOSS PLANNER

(38 PAGES)

$19.00 $9.00

BULLET JOURNAL BUNDLE

(87 PAGES)

$32.00 $12.00